Step 5A – Institute a Public Option
The Obama administration has proposed a public option for health care. What is a public option? It would be a government run health insurance company which would offer health care coverage to those people who either cannot afford private coverage, or who have been denied coverage completely. Subscribers would pay into the plan, just as they pay into private healthcare insurance. Ideally, subscribers will pick their own doctors. When patients go to the doctor, the plan would most likely pick up part or all of the tab, just as with private insurance.
Florida’s public option insurance –
created by Republican leaders
There is currently a very similar program in place in the state of Florida, called Citizens Property Insurance Corp., a not-for-profit, tax-exempt corporation formed by the state of Florida, which primarily covers homeowners for potential wind damage from hurricanes. Subscribers pay about the same rate they would pay to a private insurance company, but pay into a large government pool instead of to private insurers. Until 2007, in order to qualify for Citizens Insurance, you must first have been denied coverage from a private insurance company. While covered by Citizens, the government has the right to shop your policy around to private insurers. If they can find a private company to take on your policy and not charge you substantially more than Citizens charges, your policy will automatically be switched. In addition, Florida Insurance Commissioner Kevin McCarty keeps an eye on private insurance companies, requiring them to justify rate hikes and show them the books when gouging is suspected.
A complex list of requirements, rules, and regulations on how Citizens is operated can be found on their website: www.citizensfla.com.
Florida first began to provide government run “public option” insurance to their citizens in 1970 under Republican Governor Claude R. Kirk, Jr., when it was discovered that no one could qualify for a mortgage to buy a home in the Florida Keys because they could not get home insurance coverage. To boost the economy and help out the real estate industry, the Florida legislature formed the “Florida Windstorm Underwriting Association – the Florida Windstorm pool” to cover wind risk in the Florida Keys. It’s purpose is to "provide Florida citizens adequate wind and hail coverage, when it is not available in the insurance market place; and pay insured claims when losses occur.” The FWUA primarily covered vulnerable homes located along Florida’s coast. (source: www.floridadisaster.org)
On August 24, 1992, Hurricane Andrew, a category 4 hurricane, made landfall in the United States and caused unimaginable devastation inland throughout south Florida and Louisiana, destroying over 125,000 homes and causing $27 billion in property damage (source: NOAA). As a result, 11 small insurance companies went bankrupt and could not pay out claims. Larger insurance companies stopped writing new policies. Once again, the real estate market was in danger of collapsing because no one could get a mortgage to buy a home without the promise of home insurance.
In December 1992, the Republican-controlled Florida Legislature, under the leadershop of Democratic Governor Lawton Mainor Chiles, Jr., responded by forming the Florida Residential Property and Casualty Joint Underwriting Association to provide residential property insurance coverage "for applicants who are in good faith entitled, but are unable, to procure insurance through the voluntary market." This new public insurance expanded homeowners insurance coverage throughout all of the state of Florida.
In 2002, the Florida Windstorm Underwriting Association - the Florida Windstorm pool and the Florida Residential Property and Casualty Joint Underwriting Association merged under one name, Citizens Property Insurance Corp. (source: Sun Sentinel).
However, the home insurance industry was not truly reformed until current Republican Florida Governor Charlie Crist took office in 2007 and reined in the out of control insurance rate hikes which had been unfairly hoisted upon Florida homeowners so that home insurance companies could make larger profits.
There is currently a very similar program in place in the state of Florida, called Citizens Property Insurance Corp., a not-for-profit, tax-exempt corporation formed by the state of Florida, which primarily covers homeowners for potential wind damage from hurricanes. Subscribers pay about the same rate they would pay to a private insurance company, but pay into a large government pool instead of to private insurers. Until 2007, in order to qualify for Citizens Insurance, you must first have been denied coverage from a private insurance company. While covered by Citizens, the government has the right to shop your policy around to private insurers. If they can find a private company to take on your policy and not charge you substantially more than Citizens charges, your policy will automatically be switched. In addition, Florida Insurance Commissioner Kevin McCarty keeps an eye on private insurance companies, requiring them to justify rate hikes and show them the books when gouging is suspected.
A complex list of requirements, rules, and regulations on how Citizens is operated can be found on their website: www.citizensfla.com.
Florida first began to provide government run “public option” insurance to their citizens in 1970 under Republican Governor Claude R. Kirk, Jr., when it was discovered that no one could qualify for a mortgage to buy a home in the Florida Keys because they could not get home insurance coverage. To boost the economy and help out the real estate industry, the Florida legislature formed the “Florida Windstorm Underwriting Association – the Florida Windstorm pool” to cover wind risk in the Florida Keys. It’s purpose is to "provide Florida citizens adequate wind and hail coverage, when it is not available in the insurance market place; and pay insured claims when losses occur.” The FWUA primarily covered vulnerable homes located along Florida’s coast. (source: www.floridadisaster.org)
On August 24, 1992, Hurricane Andrew, a category 4 hurricane, made landfall in the United States and caused unimaginable devastation inland throughout south Florida and Louisiana, destroying over 125,000 homes and causing $27 billion in property damage (source: NOAA). As a result, 11 small insurance companies went bankrupt and could not pay out claims. Larger insurance companies stopped writing new policies. Once again, the real estate market was in danger of collapsing because no one could get a mortgage to buy a home without the promise of home insurance.
In December 1992, the Republican-controlled Florida Legislature, under the leadershop of Democratic Governor Lawton Mainor Chiles, Jr., responded by forming the Florida Residential Property and Casualty Joint Underwriting Association to provide residential property insurance coverage "for applicants who are in good faith entitled, but are unable, to procure insurance through the voluntary market." This new public insurance expanded homeowners insurance coverage throughout all of the state of Florida.
In 2002, the Florida Windstorm Underwriting Association - the Florida Windstorm pool and the Florida Residential Property and Casualty Joint Underwriting Association merged under one name, Citizens Property Insurance Corp. (source: Sun Sentinel).
However, the home insurance industry was not truly reformed until current Republican Florida Governor Charlie Crist took office in 2007 and reined in the out of control insurance rate hikes which had been unfairly hoisted upon Florida homeowners so that home insurance companies could make larger profits.
Republican participation
Florida’s Citizens Insurance is a wonderful model for a public option for health insurance, should the Federal government choose to go this direction.
Despite Florida Governor Crist’s highly public criticism of Barack Obama’s health care plan, I imagine that he would be happy to help formulate a similar healthcare plan based on his successes in Florida, if he is invited to the table. Crist, who has announced he is leaving the Governor’s office, will be running for a soon to be vacated Florida U.S. Senate seat in 2010. Crist has appointed his former chief of staff, George LeMieux, to temporarily fill the shoes of Florida Republican U.S. Senator Mel Martinez, who is stepping down. In addition, perhaps former Governor Claude Kirk and his son-in-law, Ander Crenshaw, a Florida legislator in the House of Representatives, might be instrumental in helping to engineer a public option for healthcare insurance similar to what they created for home insurance.
Have to be denied affordable coverage to qualify
Health insurance companies don’t want the government to form their own “public option” health insurance company because they feel that their rates will be undercut and they will be out of business. Likewise, many Americans who currently have quality private health insurance through their work or retirement don’t want the government to get involved in selling insurance plans because they feel that their employer will pick this plan over a better private plan.
Originally, Citizens Insurance solved this problem by requiring that only home owners who were denied coverage from private sources and could get new, replacement coverage elsewhere could subscribe to Citizens Insurance.
In 2007, the requirement for participating in a Citizens home insurance plan, versus a private plan, was expanded to include homeowners who were being charged exorbitant rates for home owners insurance far and above what was necessary for an insurance company to recoup their losses.
The current requirement for being a Citizens Insurance customer states that if a homeowner can find private insurance costing no more than 15% more than that of a Citizens policy, the homeowner must switch to the private insurance company.
In other words, if you are currently charged $4000 per year for home insurance at Brand X insurance, but a Citizens policy is only $2000 per year, you qualify to purchase the Citizens policy instead of the private policy.
However, if Citizens finds that you can get a policy with Brand Z insurance for $2300 per year, they will automatically sell your policy to Brand Z and you will owe the extra $300.
By doing this, Citizens ensures that they are not competing with the private sector.
The goal is to move policies back to private insurance
Public insurance was formed to cover the uninsurable. However, the goal of Citizens is to find homeowners an affordable private insurance policy in the private sector. They call this process, “depopulating” (source: Annual Report 2008).
Currently, 14 private insurance companies participate in Citizen’s depopulation program. In this program, private insurance companies are allowed to take over existing policies currently written by Citizens.
Self-funded
Republicans don’t want the government to take on the enormous cost of running their own health insurance company because they believe it will raise taxes.
However, Citizens Insurance solves this problem by having subscribers fund the program by paying into a large pool, instead of relying on taxpayers. In fact, there is no income tax in the state of Florida.
Catastrophic Fund
In addition, a special catastrophic fund, the Florida Hurricane Catastrophe Fund, or “Cat Fund,” was created in 1993 as a way to save additional money to pay for damages over and above what should regularly occur. All insurance companies, both public and private, pay into the pool and the money is not taxed. Money may not be withdrawn to pay claims except in the event of a catastrophic disaster.
The Cat Fund is invested in interest bearing accounts and the Florida Legislature pays for hurricane education and storm mitigation from interest earned on the fund.
Most coastal homeowners have both private insurance and Citizens Insurance
Today, most Florida coastal homeowners have their wind policy through Citizens, but have their fire and theft policies through other private insurers.
Currently, about $421 billion in property is covered by Citizens Insurance through over one million policies.
Applying a similar public option to healthcare
Just as a public option has supplemented home insurance, “public option” insurance can supplement health insurance.
If you have been denied insurance because you are considered too “high risk,” you may be eligible to buy “public option” coverage, instead.
Perhaps you can only afford private insurance to cover preventative maintenance or future conditions, not pre-existing ones. “Public option” coverage could be purchased to cover these medical costs.
Lots of questions on President Obama’s proposed “public option”
Because few details have been released on how a public option insurance plan will work, many of us have a lot of questions.
1. Who will be able to subscribe to the public option?
2. Will employees be able to opt out of their employer’s plan for a more affordable “public option” plan?
3. Will the plan compete directly with private insurance, or will the goal be to resell public policies and negotiate a better price for private coverage?
President Obama has suggested that by offering a public option, or government run insurance, this will create competition within the insurance industry by lowering premiums across the board. If a government plan is cheaper than a private plan, there will be no incentive to buy the private plan. In order to win back customers, the private plan will have to lower their premiums. However, this theory assumes that the private plan is gouging the customer and can afford to lower premiums.
Because a “public option” is government funded, it will have the advantage of being able to offer substantially lower rates than private insurance because it will not be run as a business, will not have overhead costs, and will not have to make money or even break even.
4. Will all rates be averaged, so that a person who is quite healthy would pay a higher rate than a person who is not?
If this is the case, there is a good chance that a person who is healthy will opt to buy the cheaper, private insurance, while a person who is considered “high risk,” will opt to buy the cheaper, public option insurance. The public option will end up being purchased by only those who are “high risk.” The costs will be high, and if the plan is not supplemented by other funds or taxpayer money, most people will not be able to afford even the “public option” premiums.
5. I assume that subscribers to the public option can pick their own doctors. Or will patients choose from a network or be appointed a physician, much as they are with many private insurance run HMOs?
6. Will the “public option” keep prices low by dictating how much the plan will cover in medical costs and prescriptions? Will doctors be forced to lower their costs? Or pharmacies be forced to cut prices for prescriptions? Will they be paid from a list of fees, much as car repair people are paid by a list of fees set by an auto insurer?
7. What about a person who cannot afford to buy even public option insurance? In the state of Florida, a person earning minimum wage at $7.25 per hour only brings home $1138.21 per month after Social Security and Medicare taxes are deducted. Any insurance policy over $50 per month is unaffordable. How will they get access to healthcare if their employer does not provide it?
Stay tuned for steps 6 and 7
Florida’s Citizens Insurance is a wonderful model for a public option for health insurance, should the Federal government choose to go this direction.
Despite Florida Governor Crist’s highly public criticism of Barack Obama’s health care plan, I imagine that he would be happy to help formulate a similar healthcare plan based on his successes in Florida, if he is invited to the table. Crist, who has announced he is leaving the Governor’s office, will be running for a soon to be vacated Florida U.S. Senate seat in 2010. Crist has appointed his former chief of staff, George LeMieux, to temporarily fill the shoes of Florida Republican U.S. Senator Mel Martinez, who is stepping down. In addition, perhaps former Governor Claude Kirk and his son-in-law, Ander Crenshaw, a Florida legislator in the House of Representatives, might be instrumental in helping to engineer a public option for healthcare insurance similar to what they created for home insurance.
Have to be denied affordable coverage to qualify
Health insurance companies don’t want the government to form their own “public option” health insurance company because they feel that their rates will be undercut and they will be out of business. Likewise, many Americans who currently have quality private health insurance through their work or retirement don’t want the government to get involved in selling insurance plans because they feel that their employer will pick this plan over a better private plan.
Originally, Citizens Insurance solved this problem by requiring that only home owners who were denied coverage from private sources and could get new, replacement coverage elsewhere could subscribe to Citizens Insurance.
In 2007, the requirement for participating in a Citizens home insurance plan, versus a private plan, was expanded to include homeowners who were being charged exorbitant rates for home owners insurance far and above what was necessary for an insurance company to recoup their losses.
The current requirement for being a Citizens Insurance customer states that if a homeowner can find private insurance costing no more than 15% more than that of a Citizens policy, the homeowner must switch to the private insurance company.
In other words, if you are currently charged $4000 per year for home insurance at Brand X insurance, but a Citizens policy is only $2000 per year, you qualify to purchase the Citizens policy instead of the private policy.
However, if Citizens finds that you can get a policy with Brand Z insurance for $2300 per year, they will automatically sell your policy to Brand Z and you will owe the extra $300.
By doing this, Citizens ensures that they are not competing with the private sector.
The goal is to move policies back to private insurance
Public insurance was formed to cover the uninsurable. However, the goal of Citizens is to find homeowners an affordable private insurance policy in the private sector. They call this process, “depopulating” (source: Annual Report 2008).
Currently, 14 private insurance companies participate in Citizen’s depopulation program. In this program, private insurance companies are allowed to take over existing policies currently written by Citizens.
Self-funded
Republicans don’t want the government to take on the enormous cost of running their own health insurance company because they believe it will raise taxes.
However, Citizens Insurance solves this problem by having subscribers fund the program by paying into a large pool, instead of relying on taxpayers. In fact, there is no income tax in the state of Florida.
Catastrophic Fund
In addition, a special catastrophic fund, the Florida Hurricane Catastrophe Fund, or “Cat Fund,” was created in 1993 as a way to save additional money to pay for damages over and above what should regularly occur. All insurance companies, both public and private, pay into the pool and the money is not taxed. Money may not be withdrawn to pay claims except in the event of a catastrophic disaster.
The Cat Fund is invested in interest bearing accounts and the Florida Legislature pays for hurricane education and storm mitigation from interest earned on the fund.
Most coastal homeowners have both private insurance and Citizens Insurance
Today, most Florida coastal homeowners have their wind policy through Citizens, but have their fire and theft policies through other private insurers.
Currently, about $421 billion in property is covered by Citizens Insurance through over one million policies.
Applying a similar public option to healthcare
Just as a public option has supplemented home insurance, “public option” insurance can supplement health insurance.
If you have been denied insurance because you are considered too “high risk,” you may be eligible to buy “public option” coverage, instead.
Perhaps you can only afford private insurance to cover preventative maintenance or future conditions, not pre-existing ones. “Public option” coverage could be purchased to cover these medical costs.
Lots of questions on President Obama’s proposed “public option”
Because few details have been released on how a public option insurance plan will work, many of us have a lot of questions.
1. Who will be able to subscribe to the public option?
2. Will employees be able to opt out of their employer’s plan for a more affordable “public option” plan?
3. Will the plan compete directly with private insurance, or will the goal be to resell public policies and negotiate a better price for private coverage?
President Obama has suggested that by offering a public option, or government run insurance, this will create competition within the insurance industry by lowering premiums across the board. If a government plan is cheaper than a private plan, there will be no incentive to buy the private plan. In order to win back customers, the private plan will have to lower their premiums. However, this theory assumes that the private plan is gouging the customer and can afford to lower premiums.
Because a “public option” is government funded, it will have the advantage of being able to offer substantially lower rates than private insurance because it will not be run as a business, will not have overhead costs, and will not have to make money or even break even.
4. Will all rates be averaged, so that a person who is quite healthy would pay a higher rate than a person who is not?
If this is the case, there is a good chance that a person who is healthy will opt to buy the cheaper, private insurance, while a person who is considered “high risk,” will opt to buy the cheaper, public option insurance. The public option will end up being purchased by only those who are “high risk.” The costs will be high, and if the plan is not supplemented by other funds or taxpayer money, most people will not be able to afford even the “public option” premiums.
5. I assume that subscribers to the public option can pick their own doctors. Or will patients choose from a network or be appointed a physician, much as they are with many private insurance run HMOs?
6. Will the “public option” keep prices low by dictating how much the plan will cover in medical costs and prescriptions? Will doctors be forced to lower their costs? Or pharmacies be forced to cut prices for prescriptions? Will they be paid from a list of fees, much as car repair people are paid by a list of fees set by an auto insurer?
7. What about a person who cannot afford to buy even public option insurance? In the state of Florida, a person earning minimum wage at $7.25 per hour only brings home $1138.21 per month after Social Security and Medicare taxes are deducted. Any insurance policy over $50 per month is unaffordable. How will they get access to healthcare if their employer does not provide it?
How I Would Fix Healthcare
Step 1 – Employers must provide a minimum $300 health insurance policy allowance for each and every worker.
Step 2 – Insurance agencies may not take more than $40 per policy for profit and administrative costs.
Step 3 – Protect Health Insurance Surplus Coffers
Step 4 – Preventative Healthcare Maintenance Schedule
Step 5 – Improve Healthcare Access
Step 1 – Employers must provide a minimum $300 health insurance policy allowance for each and every worker.
Step 2 – Insurance agencies may not take more than $40 per policy for profit and administrative costs.
Step 3 – Protect Health Insurance Surplus Coffers
Step 4 – Preventative Healthcare Maintenance Schedule
Step 5 – Improve Healthcare Access
A. Institute a “public option”;
B. Regulate rates with blind menu pricing; and/or
C. Provide free clinics and access to community health centers
Stay tuned for steps 6 and 7
