Aug. 22--The head of Florida's largest health insurer Thursday took on charges by Republicans including U.S. Sen. Marco Rubio that part of the Affordable Care Act amounts to a bailout for insurance companies.
"Sen. Rubio and I had this tug of war," said Pat Geraghty, CEO of Florida Blue, who said he is a registered independent. Rubio's argument, he contends, is "unfair."
If an insurance company's medical claims exceed anticipated costs, a federal "risk-corridor" program reimburses a share of those costs. It's a lesser-known piece of Obamacare intended to cushion risks for insurers between now and 2016 as companies adapt to sweeping healthcare changes.
Florida Republican Rubio wrote a bill to stop what he called "another taxpayer-funded bailout," but it's not getting far in the Democratically controlled U.S. Senate. "On this Obamacare bailout, as with so many issues, Washington politicians are misleading average Americans and planning to stick them with the bill," Rubio wrote in a Fox News op-ed Aug. 8.
Geraghty, speaking at a Palm Beach County Business Development Board event, said the risk corridor was a Republican idea used in President George W. Bush's 2003 Medicare prescription drug law. Rubio says Obamacare's provision is open-ended and does not protect taxpayers in a budget-neutral way.
But insurers including Florida Blue have had to adapt to a number of big changes after they filed rates, Geraghty said. For example, Obama decreed people who liked their old policies could keep them, affecting 300,000 Florida Blue customers. That changed the risk assumptions on which prices were set.
"Our price before we got to Day 1 was insufficient," Geraghty said. "That's what we call a nightmare."
Then problems with the federal health care website turned an expected 50,000 calls per week to Florida Blue to five times that, he said. The enrollment period started "with multiple disasters," Geraghty said.
Florida Blue raised rates 18 percent for Obamacare plans in 2015. Three insurers in Florida dropped rates 5 percent to 12 percent, and eight filed increases from 11 percent to 23 percent.
Florida's other U.S. Senator, Democrat Bill Nelson, said the Affordable Care Act was being blamed for increases when GOP legislators barred the state's insurance commissioner from regulating health rates for two years.
Future challenges, Geraghty said, include specialty drugs such as Solvadi to treat hepatitis C. It costs $1,000 per pill and requires 80 doses.
"That's an automatic $80,000 spend," he said. "That's going to break the bank for some state Medicaid plans."
The Florida Blue CEO said "we want these drugs but we have to get them priced" more affordably.
The company is trying to make itself more consumer-friendly with 18 retail locations including one in Boynton Beach, Geraghty noted. Someone asked why spend money on brick and mortar when so many things are moving online.