June 5, 2006 – Many questions raised by community members, health care representatives and business owners about a controversial health bill which has been languishing in the Senate since last year were answered during Monday's Health, Hospitals and Human Services Committee meeting.
However, for the fourth time around, senators decided to delay voting on the bill until all committee members are present.
Most concerns about the bill – which mandates employers to provide health care insurance for their employees – have been related to funding. Since the proposed policy is to be self-funded through the collection of a low monthly premium, community members have wondered if the plan would be able to sustain itself within the first year of implementation.
Prior to Monday's meeting, however, it has been unclear whether an entity had been brought in to subsidize the startup costs or whether the responsibility would fall on the local government.
During Monday's meeting, Florida Sen. Jim King, a principal in Employment and Business Solutions – which would be responsible for funding claims – said the agency would be kicking in $13 million to fund the startup costs of the plan, dubbed the Governor's Health Reform Initiative. To safeguard against insolvency, he added, $2 million of that amount would go toward paying claims that exceed what is collected in premiums.
Under the proposed plan, employers would team up to buy a core benefits policy for their employees through a Multiple Employer Trust set up by EBS. Premiums collected would go into the trust and would be used to fund claims, which would be processed by Fringe Benefits Management Company (FBMC), an organization brought in to be the third-party administrator (See "Still Plenty of Unanswered Questions about Health Care Initiative").
However, Eric Vogelsberg, chief financial officer of EBS, said during the meeting that he thought the funding mechanism would be running a bit differently. "What we had initially discussed is that premiums would be collected about two months ahead of time before the insurance would kick in, and the trust would be built on that," he said, adding that the trust account would be set up and managed within the territory.
"This is the first time I'm hearing about the $13 million," he said after the meeting.
The ability to fund the startup costs of the initiative was one of the requirements outlined in a Request for Qualifications sent out last year by the bill's proponents. According to Lauritz Mills, lead investigator for the Bureau of Economic Research, EBS was the "only company" to respond to the request.
When asked, Dr. Jacqueline Hoop-Sinicrope, project manager of the initiative, added after the meeting that while she projects that $3 million worth of claims would be processed monthly, she does not anticipate the value of excess claims to exceed $2 million during the first year of implementation. "First of all, re-insurance would kick in at a certain point; and second, on a monthly basis, it's not likely that [excess claims] would be more than that."
Hoop-Sinicrope explained that once claims exceed $75,000 the re-insurer would fund the claim up to $1 million.
She further said that the local government would also be kicking in another $4.6 million to fund the Premium Assistance Program, through which the government would pay one-third of the monthly premium, which is currently set at $182 and split 50-50 between the employer and employee.
Hoop-Sinicrope said she has also requested the government set up a "line of credit" to fund residents in the plan with pre-existing conditions. "We do want to ensure those individuals with pre-existing conditions, but it could add to the cost of the plan," she said. "So we would be asking for $1.5 million to $1.7 million from the government to take care of those costs. If we can't do that, however, we would have to rethink taking in people with pre-existing conditions."
Service contracts issued by the government for both EBS and FBMC also came under scrutiny during the meeting.
Responding to questioning by Sen. Usie R. Richards, both Hoop-Sinicrope and Mills said that no contracts have been issued to either company. However, Hoop-Sinicrope further stated that a "legally binding" Memorandum of Agreement had been signed by the government and EBS to provide trust management services.
"We didn't want to enact this legislation without having an entity in place that could do the job," Mills added.
Unsatisfied by the responses, Richards further asked how any agreement could have been signed with EBS prior to the enactment of the bill. "Both companies are specifically mentioned in the document," he said, adding that the bill could be considered special interest legislation. "And I take great exception to the fact that there were bids put out, or agreements signed, when this thing isn't even been signed into law yet."
Discussion on the bill is scheduled to continue at the next committee hearing, which has not yet been scheduled, according to committee chair Sen. Craig Barshinger.
Present at Monday's meeting were Barshinger and Sens. Lorraine L. Berry, Pedro "Pete" Encarnacion, Norman Jn Baptiste, Richards and noncommittee member Ronald E. Russell.
Sens. Adlah "Foncie" Donastorg and Neville James were absent.
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