Allegory of the Cave
I hope all of you had a wonderful Valentine’s week and I know you put your heart (and soul) in all that you did! This week will prove to be another fascinating journey in the legislative and regulatory “process” many of us live in (and with). Our industry is guided by laws and regulations and in a conversation this week with one of you, I was reminded of my freshman philosophy class teachings about Plato’s “The Allegory of the Cave,” and thought it analogous to the governmental process that oversees what insurance professionals do. Plato’s allegory described chained prisoners in a cave who couldn’t turn their bodies at all and could only look at one wall. Behind them were puppets using light from a fire to form shadows on the wall and they heard noises. For their entire life, that’s all the chained prisoners saw or heard — shadows and echoes. Sounds terrible, right? Plato’s point was that if all one has ever heard or seen were echoes or shadows and that was their whole world, then they must have had a pretty good understanding of how the patterns/shadows worked. In fact, they paid so much attention that the prisoners began to believe that the things on the wall were real. When the chains were removed and the objects become reality, they realized their error and wanted to reverse their perceptions.
As the coming week unfolds, Plato’s allegory is a lesson in what shadows we may see vs what is reality.
We are closely following all lines of insurance that have proposed legislation and we touch on a few of the highlights below. As you read, keep in mind that all too often, perception is reality and we can only hope we can correct misperceptions! We touch on a few of the highlights below.
Citizens
Sen. Brandes bill, SB 724, which lets Citizens decide if they want to “partner” with insurance companies as a backstop to ease policies out from Citizens to the private market. Sen. Brandes is such a solid soul! He believes – he believes hard and he sees the substance of his bill as reality and not an allegory! He has talked to everyone from Pensacola to Key West about this idea and he wants our help to make it work. Please read what he has written in this bill and comment back to me. We have a standing invitation to give him feedback and will pass yours on.
Citizens reform bill and Cat Fund reform bills – both bills are still in flux with lots of “allegory” and the reality will fall somewhere in the middle. One of the ideas getting attention is discussion of not allowing homes of “higher” values – There’s about 60,000 homes that have values of $400,000 and up in Citizens – see attached chart. The private market indicates it can ensure them. Thursday, February 20, 2013, will be a PACKED Senate Banking and Insurance Committee. We will send out meeting notices as they are released.
Property Insurance Market Reforms
Senate Bill 324 is another bill by Sen. Brandes bill with Rep. Raburn sponsoring House Bill 211 – the FIGA assessment reform bill — a REAL idea that is a safeguard for all consumers and continues the forward momentum for property insurance market reform. The bill is simple reality: it gives the FIGA board a choice to raise cash up front or via pass through to insureds. The bill will be heard Tuesday 2/19/13, visit the Florida Channel to find the House Banking and Insurance Subcommittee meeting that starts at 3pm.
–HB 335 removes OIR review/approval of ALL Commercial Form/policy products (except work comp). It passed its first committee stop unanimously. This is a free market initiative that has been 3 years in the making.
Personal Injury Protection (PIP)
Insurance fraud enforcement teams continue their work to send a strong signal to the bad guys and gals. A south Florida chiropractor was ordered last week to pay almost $2 million in restitution, sentenced to 54 months in prison and 3 years probation for perpetrating a fraud scheme where recruiters sought out drivers and their friends/family members to participate in staged accidents. The recruiters referred to the individuals whom they recruited as the “Perro” and the “Perra.” The “Perro” was the person who “caused” the staged accident. The “Perra” was the person who was the “victim” of the staged accident and whose car was struck by the “Perro’s” car. Thus, if the recruiter found a Perro with a wife and two children and a Perra with two friends, for a total of seven (7) participants, the maximum PIP benefit was $70,000. The recruiters provided coaching on staging the actual accident, what to relay to responding police officers, and how to report injuries. Following each accident, the Perro and Perra filed false claims with their insurance companies, alleging that they and their family members were injured. On Thursday, February 20, please google the Senate Banking and Insurance Committee so you can listen to senators review the “state of the state” of PIP asking questions like, “are the reforms in the 2012 House Bill 119 enough”? Or “why haven’t the insurance companies rolled back their rates more than they did?” The allegory of PIP is frustrating – our state policymakers BELIEVE the reforms they passed should translate to instant rate rollbacks when in REALITY it takes time for reforms to take hold. Frauds like the above go on every day. You on the front lines are working to fight them and don’t let the shadows or echoes faze you!
Medicaid Expansion – will it or won’t it?
House and Senate Committees continue to meet to understand the best course of action for implementing the Affordable Care Act (ACA) in Florida. Back and forth, the debate continues with those favoring Medicaid expansion from groups such as the Florida Hospital Association, Georgetown Health Policy Institute and the Center for Fiscal Responsibility. These groups testified that Florida’s health care delivery system will have the capacity to handle the estimated 2 million additional Medicaid recipients because they would enter the system gradually under a managed care approach. In addition, supporters said that taking advantage of the subsidies for the Medicaid expansion could eliminate expenses for other medical care for the poor with estimates of over $100 million in cost decreases.
The other side of the debate heard from the Foundation for Government Accountability, a conservative think tank, who discussed Arizona’s Medicaid expansion. Also appearing was the Maine Commissioner of Department of Health and Human Services. Testimony from these speakers said that Medicaid expansion will not be successful in reducing costs because the floodgates will open from those who have avoided medical treatment in anticipation of the expansion, exploding the already out of control uncompensated care. Governor Scott did not put a placeholder in his 2013 -14 budget for Medicaid expansion unlike governors from Michigan to New Mexico who will expand it with a backstop to shrink the expansion if the feds reduce subsidies to pay for it.
Seeing the light – Reality vs. Allegory
In closing, come learn with us as we follow this difficult legislative and regulatory journey. Our state must be prepared to make some mistakes — it’s all part of the process. True knowledge of reality must be obtained the hard way, and some people just don’t want to see the light. We will do all we can to shine it!
Best to all of you for a great week! Lisa Miller
