Commissioner Praises Law Regulating Discount Medical Plans On Eve Of Anniversary
Contact: Beth Scott
Tallahassee – Insurance Commissioner Kevin McCarty praised the effectiveness of the "Affordable Health Care for Floridians Act" passed by the 2004 Florida Legislature, which made Florida the first state to comprehensively regulate discount medical plan organizations (DMPOs).
"The results have been impressive," Commissioner McCarty noted after a recent internal review of the two-year old law, "Whether it is the increased financial oversight, more truth in advertising, or ensuring that consumers receive fair value for their purchase, the new law has accomplished its objectives."
Prior to the law, the Department of Financial Services (DFS) received over 1,000 complaints annually by angered Floridians duped by unscrupulous discount medical plan organizations. Complaints ranged from consumers that unknowingly dropped their health insurance, plans that falsely advertised discounts and provider networks, and even "fly-by-night" companies that accepted large initiation fees only to declare bankruptcy and keep the consumer's money.
The most recent DFS complaint statistics show that complaints for DMPOs have dropped over 70% since the new law became effective. Some of the accomplishments include:
Financial Stability – the new law requires DMPOs to maintain a net worth of $150,000, and requires submission of annually audited financial statements. This has enabled the Office of Insurance Regulation (Office) to suspend one DMPO, and intervene with other troubled plans to ensure that DMPOs could honor the advertised benefits.
Stability in the Marketplace – Of the roughly 60 DMPOs operating in Florida prior to the law, only 38 received certificates of authority upon passage of the new law eliminating many of the "bad actors" that were preying on consumers.
Reasonably Priced Products – Prior to the new law some DMPOs charged up to $100 for nonrefundable application fees, and $269 monthly fees. Consumers often confused such high priced plans with health insurance. The new law and subsequent revision in 2005 capped the monthly fees to $30 a month. This has helped ensure that consumers received benefits in relation to their monthly fee, and that consumers are not confusing the product with health insurance.
Despite this success, recent market conduct examinations have shown that several licensed companies have continually violated laws relating to form filings, and the use of prohibited language in advertising materials.
"The OIR is not resting on its laurels," Commissioner McCarty added, "Several DMPOs continue to advertise their products as health insurance. The new law makes it clear that this practice will not be tolerated. We have over two million Floridians without health insurance. The state of Florida needs to continue to ensure consumers are buying a viable DMPO product that will actually provide benefits when they are used." Despite some continued abuses in the system, the Commissioner considers the 2004 statute an overwhelming success, and this regulatory effort has put the state of Florida on the forefront of protecting consumers.