Florida Health News:
Insurance Prices Rise Again!

Twenty five years ago, $1 out of every $10 spent in the United States was directed at medical care. In 2005, the last year figures are available, $1 of every $6 was spent on health care. Health care spending rose 6.9 percent in 2005, the slowest pace of increase in six years. The Associated Press reports the relatively small increase comes from greater reliance on generic drugs.

The spending pattern is compiled from reports produced by the Centers for Medicare and Medicaid Services. Prescription drug spending growth was lower than overall medical spending for the first time since the early 1990s. It stands to reason that health care spending is concentrated. Two percent of all U.S. consumers account for about a third of all health care expenditures.

Hospitals account for about 30 percent of all health care spending, according to the federal Medicaid and Medicare agency. Physicians received a little over 21 percent and drugs make up about 10 percent of all spending. Economists quoted by The Associated Press said health-care spending often increases at a much faster rate than the overall economy during recessions and in the years immediately following.

In other insurance news...Florida homeowners could see property insurance rates drop by as much as 25 percent under a bipartisan plan put forth Wednesday by state House leaders.

House leaders would roll rates back to 2006 levels for the 1.3 million customers of Florida's largest insurer, state-created Citizens Property Insurance. The company sells policies to those who can't get private coverage. Legislators also want to make cheaper backup insurance available through the state's catastrophe fund with a requirement that savings of at least 25 percent be passed on to consumers.

Those two ideas have already been embraced by Senate leaders, making it likely they'll pass next week when legislators hold a special session aimed at lowering insurance costs, which have skyrocketed since Florida's back-to-back hurricane hits of 2004 and 2005.

While bills containing the proposals haven't been filed, House Speaker Marco Rubio, R-Coral Gables, unveiled the general plan on Wednesday. The Senate is working on its own bill. A couple of key parts of the House plan aren't in the Senate's proposal. One would prevent large national insurers from creating new Florida-only subsidiaries. Many of those companies have come under criticism because they charge high rates because of Florida losses - while the national parent company reports large profits.

The House plan also goes after Florida subsidiaries already here by requiring regulators to take into account the profits of national parent companies when setting the Florida company's rates. The insurance industry says Florida is a special risk.

"Having that Florida subsidiary is exactly what allows State Farm to stay here," said Justin Glover, a spokesman for State Farm's Florida company, the largest private insurer in the state. A year ago lawmakers said the biggest concern was that there weren't enough companies selling policies, and that forced people into Citizens, which has higher rates than private insurers. So, lawmakers in May passed a measure aimed at making it more attractive for private insurers to do business in Florida, in part by making it easier for rates to go up in some cases.

Go up they did - and legislators have heard about it from many homeowners. "Circumstances change," Rubio said about the House's new direction. Many lawmakers clearly feel that after the 2006 hurricane season brought no storms to Florida, rates should have gone back down, which they didn't. Rep. David Rivera, R-Miami, even accused companies of "price gouging and profiteering." "I don't think there is any constituent in Florida who believes insurance companies didn't have a profitable year," Rivera said.

House members also feel Citizens Property's management hasn't provided good customer service. The proposal would replace the company's entire board of directors. A Citizens spokesman said the company didn't have a comment. Industry officials were cautious in their reaction to the overall House plan. Companies have long threatened that if Floridians insist on lower rates, insurers will leave. And several companies have dropped policies recently. "Be very careful," Florida Insurance Council spokesman Sam Miller urged legislators. "Please don't destroy the private market."

The House proposal will seek to keep companies here in part by requiring those that sell other types of insurance in Florida, such as auto coverage, to also sell property policies if they cover property in any other state. House Democratic Leader Dan Gelber, D-Miami Beach, said he was "heartened and encouraged" by the House proposal. "Both bodies seem to have rejected outright that the way to reduce rates is to let (insurers') profits go up," Gelber said.

Gov. Charlie Crist hasn't released his insurance plan yet, but has said that his main concern is that whatever passes should result in lower rates. "They are clearly on the right track," Crist said Wednesday. Senate Republican leaders on Wednesday also agreed to add a Democratic-proposed idea to their bill. The plan would create a state "super-backup" fund that would guarantee to bail out insurance companies in the event of a massive storm that threatens to put the insurance companies under.

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