The Fine Print

Crist, Sink and Bronson get free health insurance from state

When it comes to providing health care to Florida’s nearly 4 million uninsured, Gov. Charlie Crist urges “no government mandates” and “no tax dollars involved.” 

But Crist himself gets free health insurance, which covers all the usual health services, courtesy of the taxpayers. So do members of the Cabinet, the Legislature and 26,000 state workers.

The governor, asked about the free coverage this week, said he sees no reason to change things.  “I think we have a good setup right now,’’ he said.

Crist is not the only statewide elected official getting free health insurance. Chief Financial Officer Alex Sink and Agriculture Commissioner Charles Bronson, both of whom are multi-millionaires, as Florida Trend reports, get free insurance, as well.

Attorney General Bill McCollum is the only member of the Cabinet who does not get free health insurance from the state, but instead he gets coverage through the federal government. More here.

Alex Sink's cold war with the insurance commissioner

Gov. Charlie Crist and two members of the Cabinet voted on Tuesday to select a new person to head the Office of Financial Regulation, the arm of state government charged with investigating financial fraud.

But in the two-and-a-half years since a new administration took over there has never been a vote to confirm Insurance Commissioner Kevin McCarty, who was picked for his job when former Gov. Jeb Bush was still in office. And as long as Chief Financial Officer Alex Sink remains in office that won't likely change.

While McCarty has constantly been praised by Crist, it's clear that Sink has a completely different viewpoint. Sink has faulted McCarty on a number of times since entering office in 2007. Her displeasure flared up again at Tuesday's Cabinet meeting when McCarty presented a report on the entry of new capital into the property insurance market.

McCarty made the presentation at the request of Sink, who was following up on complaints from lawmakers who pushed the insurance deregulation or a.k.a the "State Farm" bill. These lawmakers have contended that McCarty misled Crist before he vetoed the legislation and there remains a quiet effort to get the Legislature to pass a new version of the bill if there is a special session later this year. The bill in essence would allow large capitalized carriers to have unregulated rates. (Sink refused to say Tuesday whether Crist should have signed or vetoed this bill - saying that was "the governor's decision" to make.)

McCarty for his part has refuted the suggestion he misled anyone, saying he and members of his office have been "candid" that a big chunk of new capital in Florida has come from unregulated surplus lines carriers which do not usually cover those in the residential homeowners market.

Sink on Tuesday morning chided McCarty for failing to get her the information she requested earlier, saying "it still stuns me" that his office was unable to get the information to her sooner. She added "It's really disturbing" and "I find it insulting."

The job of insurance commissioner used to be an elected position. But the 1998 reorganization of the Cabinet approved by voters collapsed the job of state treasurer and comptroller into the new chief financial officer position. But lawmakers uncomfortable with handing over all the power to the CFO - primarily Tom Gallagher since he was the main GOP candidate for the new job - placed the hiring and firing of the insurance commissioner under the governor and Cabinet.

But there was a twist in that 2002 law: It would take three votes - including yes votes from both the governor AND the chief financial officer - to either hire or fire the insurance commissioner. Translation: If the governor and the CFO don't agree, nothing happens. Sink has backed legislative proposals to change this, including an effort by Sen. J.D. Alexander to require an annual vote on whether to keep the commissioner, but that hasn't gone anywhere.

When asked on Tuesday whether she had confidence in McCarty, Sink instead repeated that he "didn't complete his assignment on time." When then asked if Sink would keep McCarty if she were elected governor, she said "that's entirely speculative."

She then added: "You always review the people who are there and evaluate their qualifications and then you make a decision."

Interestingly enough, Attorney General Bill McCollum - and Sink's likely rival for the governor's office in 2010 - praised McCarty's report, saying that Floridians should "very pleased" with the amount of surplus lines coverage since it has helped decrease the need to have commercial coverage picked up by state-created insurers.

End of freebie for legislators and other state workers?

The Florida fund that pays the health care bills for tens of thousands of state employees will become insolvent in two years unless something drastic is done, state economists say. Someone has to fix the fund, either the taxpayers or state workers, and a top state senator says it should not be the taxpayers.

It's time to end the free health-insurance perk that legislators and 26,000 state workers -- those who aren't part of the career-service system -- now receive, says State Sen. J.D. Alexander, a Lake Wales Republican and chairman of the Senate committee that oversees the state budget.

The Department of Management Services has concluded that the state would collect an extra $44.9 million a year if it charged all state employees the same amount for health insurance. Rank-and-file state workers pay $50 a month for standard individual coverage and $180 a month for family coverage. 

"Quite frankly, it’s time we have the same for legislators as everybody else,’’ Alexander said. More here.

Surprise! There's confusion with new insurance law

Florida lawmakers spent hours and hours crafting a comprehensive insurance law designed to scale back the size of the Florida Hurricane Catastrophe Fund and give Citizens Property Insurance Corp. permission to once again seek rate hikes for its more than 1 million customers.

But maybe in a move that should not surprise anyone the new law is causing confusion - and could lead to a showdown between Citizens and state regulators. More here.

The upshot: Did lawmakers intend for all Citizens customers to get hit with a 10 percent rate hike? Or is Citizens supposed to give "acturially sound" rates to everyone - even if the current rating models call for a decrease? This is not a matter of mere conjecture: Thousands of homeowners outside of South Florida could be affected since models right now suggest decreases in places such as Duval, Escambia, Pinellas, Santa Rosa, Wakulla and Sarasota counties. The same models suggest the maximum 10 percent hike for South Florida residents.

A Citizens panel voted Monday that no one should get a rate decrease at a time when Citizens' finances are still far from solid. But that runs counter to the opinion of the Office of Insurance Regulation - and the general counsel for Citizens. OIR general counsel Steve Parton bluntly told Citizens officials on Monday that other state laws compel them to give decreases to those who deserve it. Citizens' top lawyer has suggested that the state's largest property insurer have the decreases mirror the increases: Limit both to 10 percent.

That lead to a half-hour discussion of just what lawmakers meant with the new law and the meaning of statutory construction. A final decision by the Citizens Board of Governors is now scheduled for July 8. OIR will then get to rule on the rate filing, which would take effect in 2010.

Interestingly enough, the legislators who helped craft the bill say they had no intention of excluding possible rate decreases.

Sen. Garrett Richter, R-Naples and chairman of the Senate Banking and Insurance Committee, said that he has no problem with the idea of allowing rate decreases up to 10 percent to run with the permitted 10 percent rate hikes also authorized by the law.

"One of the primary goals of the legislation was to become more fiscally responsible in the state of Florida,'' said Richter in an interview for my Citizens story for the Sarasota Herald-Tribune. "Allowing 10 percent up and 10 percent down would still generate $130 million toward fiscal responsibility."

Rep. Bryan Nelson, R-Apopka and sponsor of the House bill, said he was surprised to hear about the debate over whether rate decreases were allowed under the new law. But he did say that he did not know how Citizens could charge someone more than an acturially sound rate. Nelson said to do that would continue the division between "haves and have-nots" that already exists in Citizens rates.

As the winds get ready to blow, there's still worries for Florida's backup insurance

On the eve of yet another hurricane season, the Florida Hurricane Catastrophe Fund probably could not cover all of its obligations,the fund advisory council concluded on Tuesday.

The fund is Florida's state-created reinsurance fund intended to provide low-cost backup financing for private carriers and Citizens Property Insurance Corp. Insurance carriers must purchase reinsurance from the Cat Fund in order to write homeowners insurance in Florida.

While the financial outlook for the Fund is a lot better than it was last October, it is estimated that the Cat Fund could probably borrow up to $8 billion in bonds to cover claims, leaving it with a potential shortfall of $11.5 billion to cover all of its obligations. (This is assuming that the Gov. Charlie Crist signs into law a recently-passed bill that whittles backs the size of the Cat Fund's exposure and requires carriers to pay higher costs to support the Fund.

"There is still a significant amount of uncertainty that the Cat Fund would face in the financial markets after a large event,'' said John Forney, the fund's financial advisor from Raymond James & Associates.

Crist, who will probably hear about the latest estimates at Wednesday's meeting with the Cabinet, said he had not heard about the latest Cat Fund estimates when asked on Tuesday. Crist did say that he still plans to sign HB 1495 - which also raises rates for Citizens - into law when it reaches his desk.

The Cat Fund will have $27.5 billion worth of exposure in the coming hurricane season. The potential shortfall would leave the Fund with almost enough to cover all the claims in its so-called mandatory layer - which is the coverage that all carriers must purchase. But this estimate means that the Fund would have difficulty raising money to cover its additional exposure know as the Temporary Increase in Coverage Limit. Carriers are under no obligation to purchase this coverage, but many do, including Citizens, the state's largest property insurance carrier.

But it would take a large storm the size of a Hurricane Andrew or Hurricane Katrina in order to generate the type of claims that would require this size of payout. And the Cat Fund does have an estimated $8 billion already in hand that it could use to pay out claims initially, buying it time before it would need to borrow additional money (including maybe from the federal government if Congress passes a measure authorizing it.)

Forney during his presentation did take a shot at what he called "Cat Fund bashing" on Tuesday, reminding the council that the Cat Fund has done its job of helping provide low-cost reinsurance and that its ability to assess every insurance policy in Florida gives its a way of repaying its debt that still makes it attractive to some in the bond market. The current shortfall is a result of the size of the Fund's exposure and the remaining fallout from last year's meltdown in the financial industry.

Forney said the bill lawmakers passed went a long way to improving the Cat Fund's financial health in the long run.

 

 

5 biggest questions of session finally answered

Well, it took more than 2 months and a week-long extension, but the 5 biggest questions of the 2009 session have been finally been answered.

1. Do Republicans reject some or a large portion of the federal stimulus? For the most part, the answer is no. Without the huge infusion of stimulus cash from the federal government, state lawmakers would have had to cut deeper in order to balance this year's state budget. Jerry McDaniel, the governor's budget director, pegged the amount of stimulus bucks authorized in the budget at $5.3 billion. But the GOP lawmakers can assure their constituents they didn't take it all. They refused to enact changes to the unemployment compensation system that would have drawn down an additional $444 million for out-of-work Floridians.

2. Is it a tax, is it a fee, is it fair? The answer is that yes there are tax increases, yes there are fees, and it depends on who you are asking on whether it is fair. House Republicans tried on Thursday to use semantics to label the $1 a pack hike in the cigarette tax a "surcharge" by suggesting it would only be paid by those who smoke. Everyone else, however, including Senate Republicans will keep calling it a tax increase. Beyond this are plenty of fee hikes - that again depending on your view - could be called a tax increase since some of the money is going straight into the main checking account of state government. Lawmakers, however, refused to consider ending sales tax exemptions, such as the one for bottled water. But will Floridians wind up paying more? The answer is yes.

5 biggest questions of the 2009 session remain largely unanswered

One month ago I posed the 5 biggest questions heading into the 2009 session.

Reaching the halfway point, here's where everything stands.

1. Do Republicans reject some or a large portion of the federal stimulus money? The answer is for the most part no. I predicted it would be hard for state lawmakers, especially those in the House, to reject stimulus money while also saying no to expanded gambling and tax hikes. That's turned out to be the case. But there are still some substantial issues unresolved, including whether or not Florida will change its unemployment compensation laws in order to draw an estimated $1.1 billion in additional aid for the state's jobless. A good deal of that money doesn't flow into the actual budget so it's not part of the ongoing tug-of-war.

2. Is it a tax, is it a fee, is it fair? This question has still been unanswered. There's a cigarette tax on the table, changes to corporate taxes, dozens of fees being considered. A House panel last week had to break for a half-hour because there weren't enough votes to get one fee bill passed out. This is one of the significant stumbling blocks in getting out on time.