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Gallagher Announces Plans to Make Health Insurance More Affordable for Small Businesses

11/1/2002

TALLAHASSEE - State Treasurer and Insurance Commissioner Tom Gallagher today announced his support of a committee's recommendations to expand the number of health insurance plans available to small businesses, make coverage more affordable through cost-sharing features, and enhance the benefits available in plans, including the addition of prescription drug coverage.

The recommendations, among others, were adopted by the Small Employer Benefit Plan Committee today, which was appointed by Gallagher to explore options for making health plans more accessible and affordable for small businesses.

"Redesigning and expanding the number of health insurance plans available to small businesses and pursuing other market reforms will help employers continue to offer coverage to their employees and provide better coverage opportunities for Floridians," said Gallagher.

When Gallagher appointed the committee in June, he cited concern that rising premiums would force many small employers to stop offering coverage to their employees. There are nearly 1.2 million Floridians who are covered in the small group health insurance market, which represents employee groups of 1 to 50.

Gallagher also said that a full-scale review of the standard and basic health plans offered in the small group market had not been done since Florida's small group law was established in 1992 by the state Legislature. Florida law authorizes the state's insurance commissioner to form a new health benefit plan committee when changes are needed and appropriate.

Gallagher said that the new plans developed by the committee could save as much as 20 to 40 percent in premiums for some small employers. The new plans, often referred to as standard and basic plans, include Health Maintenance Organization (HMO) co-pay plans, HMO co-insurance plans, indemnity insurance plans and Preferred Provider Organization (PPO) insurance plans. Gallagher said he expects that all insurance companies that write coverage in the small group market will offer the new plans by April 1, 2003.

More specifically, the committee revised the plans to include features consumers were demanding when seeking health insurance coverage, including increased lifetime maximum benefits and prescription drug coverage. For the basic plans, the committee recommended changes to make them more affordable such as a deductible and a maximum out-of-pocket option to use Medical Savings Accounts and a wider range of cost-sharing options.

In addition to the redesign of the benefit plans, the committee recommended several market reforms that would require review by the Florida Legislature, including:

§ evaluating the re-opening of Florida's high-risk pool;
§ enabling HMOs, like insurers, to establish reasonable reimbursement levels for non-participating medical providers; and
§ requiring insurers to notify employees of businesses with fewer than 20 employees of their right to continued coverage if terminated, also referred to as mini-COBRA.

Gallagher, who has pursued some of the market reforms recommended by the committee in previous legislative sessions, said that he plans to lobby for these changes during the 2003 legislative session.

"I applaud and admire the committee's hard work and the progress they made in such a short period of time," Gallagher said, "but I believe more can be done."

Gallagher pointed out that the committee had identified that the spiraling cost of medical care, particularly escalating hospital services and prescription drug costs, as the primary cost driver of today's health care premiums. However, direct involvement of all stakeholders in the health care industry - including patients, physicians, hospitals, pharmacies, and trial attorneys - is needed to successfully address cost drivers, he said.

A copy of the Small Employer Benefit Committee's report is available as a link to this release on the department's web site - www.fldfs.com . Those interested in obtaining a faxed copy can contact the Press Office at 850/413-2842.