Very little about Blue Cross/Blue Shield of Florida’s reorganization plan sounds good.
For starters, the state’s largest private health insurer is vague about the reason for the change. Supposedly, it would give the company flexibility to compete better in the changing health insurance market, and thus do better for customers. We heard the same justifications for the financial deregulation of the late 1990s that led to the panic of 2007-08.
Add that the senator whose amendment this year made the proposed reorganization more potentially lucrative wouldn’t discuss the amendment. The legislator, Sen. Joe Abruzzo, D-Wellington, cast a vote on property insurance this year that favored industry over policyholders.
Toss in that Blue Cross/Blue Shield, which markets itself as Florida Blue, has donated nearly $1 million toward Gov. Rick Scott’s reelection. The decision on the company’s proposal will be made by Insurance Commissioner Kevin McCarty. He serves at the pleasure of Gov. Scott, Chief Financial Officer Jeff Atwater and Attorney General Pam Bondi. Two of the three can vote to fire Mr. McCarty, but the governor must be one of the two.
And this week The Post’s Charles Elmore, who flushed out this story, reported that insurance regulators who work for Mr. McCarty wrongly kept the public from seeing names and addresses of those commenting on Florida Blue’s proposal. Yet regulators did give Florida Blue the names and addresses.
Florida Blue wants to change from a non-profit to a mutual insurance holding company. If it became just a mutual, the policyholders would own it. As a mutual holding company, Florida Blue could buy other non-profit insurance companies. As a mutual holding company, Florida Blue also would be able to move its money around.
Why could that matter? A key provision in the Affordable Care Act requires health insurers like Florida Blue to spend 80 percent to 85 percent of their premiums on claims or expenses that improve quality of care. Otherwise, they must issue refunds.
Would Florida Blue’s reorganization make it harder for regulators to track the money and determine this “medical-loss ratio?” Large property insurers have played this game in Florida for years by creating state-only versions of their companies. Insurance Commissioner Kevin McCarty and Florida Blue deny that the reorganization would affect rebates. But there’s no way to be sure.
Florida Blue paid 14 executives and directors more than $1 million last year. The concern is that reorganization would turn Florida Blue into a for-profit company in all but name. Florida Blue representatives acknowledged at a hearing in Miami that the reorganized company might issue stock.
Obama administration officials very much want Florida Blue and similar companies in the new health care exchanges. Florida Blue has bipartisan clout behind its push. But would the change be good for anyone but Florida Blue?
for The Post Editorial Board