Florida Insurance Revisited

TAMPA (2009-01-09) Some homeowners are upset with the "take-out" or shifting of insurance policies from Citizens. The idea is to lower the state-run insurer's risk exposure. But, consumers believe it's putting them at risk. It's a part of the state's ongoing attempt to stabilize Florida's property insurance market.

During the 2004-2005 hurricane seasons, a total of eight storms cost Florida billions of dollars in property damage. Insurance companies stopped writing new policies and there was a stampede to not renew current policies.

Like tens of thousands, Michael Letcher, a former bank executive and licensed CPA, had his policy canceled.

Letcher's hunt for a company to insure his Lake Worth home led to the creation of his online Home Insurance Buyers Guide. His independent company helps homeowners find, screen and contact insurance companies that are writing new policies in their area.

The state offers a similar site: shop and compare rates.com.

State incentives have helped to increase the number of companies writing property insurance, but Letcher says more is needed.

"These are pretty staggering numbers, if you think about the whole state of Florida there are about 450 licensed homeowner insurance companies," Letcher says. "And of those 450, there are only 41 that are actually writing any new business."

One incentive program offered $250 million in low interest state loans to insurance companies that put up matching funds and committed to writing more policies or face penalties.

That program still exists, but all the money is committed and legislative attempts to expand it were vetoed by the governor.

Another effort to stabilize the property insurance market is the state backed re-insurance that requires companies to pass their savings on to policy holders. State regulators say premiums have gone down on average 16 percent.

And, in the last three years, about 30 new property insurance companies have come into Florida according to Ed Domansky, communications director for the Florida Office of Insurance Regulation which licenses and oversees the rates and financial solvency of insurance companies.

Domansky believes smaller companies are getting a bad rap in part because they're linked to the legislature's "take-out" program designed to reduce the number of policies held by state-run Citizens Insurance.

Insurance seen as possible motive in Vegas slaying

LAS VEGAS—Authorities didn't believe Thomas William Randolph's claim that an armed intruder shot and killed his wife before he shot and killed the gunman last May.

Las Vegas police homicide Lt. Lewis Roberts said Randolph's deameanor and evidence at the scene didn't add up.

Instead, investigators allege, Randolph hired a handyman to kill his wife and then killed the handyman in a plot to collect more than $400,000 in insurance.

Randolph, 53, was arrested Thursday at his mother's home in Utah, a day after a grand jury in Las Vegas handed up a four-count indictment charging him with murder and conspiracy in the May 8 slayings of his wife, Sharon Clausse Randolph, 57, and the handyman, 38-year-old Michael James Miller.

Randolph was being held Friday at the Davis County jail in Utah pending extradition to Nevada.

Authorities in Las Vegas and a former prosecutor in Utah said suspicions in the Las Vegas case were heightened by Randolph's past, including his acquittal by a jury in the 1986 shooting death of a previous wife, Becky Randolph, in Clearfield, Utah.

"I wish them every success in being able to convict Mr. Randolph, because I wasn't able to," said former Davis County Attorney Mel Wilson, the prosecutor in that case. Randolph maintained that Becky Randolph's death was a suicide. Utah cannot try him again.

Wilson, now a private attorney in Bountiful, Utah, said Las Vegas police detectives contacted him weeks ago about Randolph.

Obama's New Deal: Encourage People to Stay Unemployed

The New York Times reported on the front page of its Sunday edition that as part of the planned stimulus program, Obama Considers Major Expansion in Aid to Jobless. If the article is true, it is a very bad sign for both the economy and the culture:

One proposal, as described by Democratic advisers, would extend unemployment compensation to part-time workers, an idea that Congressional Republicans have blocked in the past.

Other policy changes would subsidize employers’ expenses for temporarily continuing health insurance coverage to laid-off and retired workers and their dependents, as mandated under a 22-year-old federal law known as Cobra, and allow workers who lose jobs that did not come with insurance benefits to be eligible, for the first time, to apply for Medicaid coverage.

As far as the economy goes, the plan as discussed basically involves paying more people in both cash and benefits to stay unemployed. This is just about the worst possible approach to reinvigorating the economy.

A major recession will require many people to make real adjustments and do difficult things. They will have to relocate to different states, change careers, accept significantly lower pay while they gain experience in their new careers, work short-term at unrewarding jobs while they go to night school to train for better careers, etc.

In the long run, this Schumpeterian process of creative destruction will benefit both the individual and the economy at large. The individual winds up working in a new, more rapidly growing and thus a more opportunity-filled industry while the country sees its resources--in this case labor resources--reallocated to places and careers where they can do the most good.

In the short term, though, this type of transition wreaks havoc on families and individuals--that is why it is called creative destruction. This means that few people will undertake such changes except under extreme necessity. Anything the government does to reduce that necessity--such as paying benefits and giving health insurance--creates a reason for a waitress in Michigan to stay put and hope things get better when the real opportunity for her may be to move to Arizona and work in the elder-care industry.

Beyond economics, extending these types of benefits is extremely corrosive to the culture. As a small business owner, I can’t tell you how many people over the years have approached me looking for work “off the books” because they were receiving unemployment benefits and didn’t want to lose them. These job applicants perceived getting a job as carrying an enormous tax equal to 100% of the unemployment benefits. Add in normal income and payroll taxes plus the cost of commuting and they saw a job as not worth it. These types of benefits tempt otherwise law-abiding citizens to engage in illegal activities.

Traditional unemployment benefits have already been extended by 13 weeks in states with an unemployment rate of at least 6 percent. This will delay the recovery. To add subsidized health insurance and Medicaid for those who never had health insurance plus give money to former part-timers … this is all a way of slowing necessary changes in the economy.

One can appreciate the need to increase aggregate demand; one can empathize with the desire to help unemployed people, but if the goal is a speedy recovery without undermining law-abiding practices, the rule should be simple: Minimize or avoid situations in which we pay people for staying unemployed.

Ten healthcare suggestions for the Texas Legislature

The 2009 legislative session is unlikely to lift the state out of its rock-bottom national ranking in healthcare.

Texas has the highest rate of uninsured residents and spends the least per resident on healthcare — $2,141 compared with the national average of $3,508. The state is not impoverished, ranking 21st in per-capita income, and consistently has a lower unemployment rate than the nation.

Healthcare spending is simply not a priority.

But legislators can improve accessibility and affordability by exerting leadership.

Here are 10 suggestions.

Aggressively enroll eligible children in the Medicaid and Children’s Health Insurance Program (CHIP).

According to the Austin-based Center for Public Policy Priorities (CPPP), about half of uninsured children are eligible for these programs.

Extend children’s Medicaid eligibility from six to 12 months.

The 2007 Legislature extended CHIP enrollment to annual eligibility. Medicaid children deserve the same. When California extended Medicaid eligibility re-enrollment to 12 months in 2001, it saved an estimated $17 million when 3,000 fewer children were hospitalized for asthma, pneumonia and gastroenteritis, says a recent study in Medical Care.

Allow Texans to buy their way into the CHIP program.

According to CPPP, there are families who request pay cuts to enable their children to qualify for the program. Parents making up to $63,000 (more than current eligibility, 200 percent of the federal poverty level, or $42,400 for a family of four) should be able to sign up their children and pay a premium for coverage.

Make insurance companies accountable for their rates.

Texas premiums for family coverage increased 40 percent between 2001 and 2005 while income was up only 3.5 percent. But according to the Journal of Insurance Regulation, Texas is only one of 10 states that do not actively review health insurance rates. The Texas Department of Insurance is up for a sunset review, and lawmakers should use the opportunity to strengthen the department’s oversight.

Assist in forming risk pools to protect individuals and small businesses from unaffordable rates.

Other states have implemented reforms for reinsurance — or insurance for insurance companies — to lower rates, made high-risk pools more affordable for those with chronic conditions, and formed health insurance exchanges to assist in creating a larger risk pool and foster competition among insurance companies.

Improve the Texas Advance Directives Act.

A 2007 compromise bill that would have improved the 1999 version for disputes over end-of-life care failed primarily because the session ran out of time. The measure built more time and a swift legal appeal into the process and dictated better communication between the care providers and patient families. It deserved passage.

Keep the funds for trauma care where they belong.

Money designated for hospital trauma centers from the Driver Responsibility Program fines continues to be diverted for other uses. Trauma centers are only getting about half of the fines’ proceeds.

Implement a statewide smoking ban.

Cigarette smoking and obesity are the two most preventable causes of chronic disease and death. Smoking restrictions and excise taxes are the most effective means of decreasing smoking rates. The House passed an exception-laden ban in 2007 that deserved its legislative death.

Build on protections against "balance billing."

This hoary practice bills patients treated by physicians outside their insurer’s network for the portion the insurance company won’t pay. This is especially outrageous in emergency situations where the patient is in no condition to make informed choices. California and Illinois have taken measures to protect residents, and Texas should do the same. Lawmakers in 2007 passed requirements for disclosure of non-network practitioners, but they need to go further.

Increase healthcare access by increasing providers and broadening scope of practice.

The the state demographer reports Texas will need at least 40,000 new doctors by 2025 because of physician retirements and population growth. The Task Force on Access to Health Care in Texas recommends increasing the number of medical school graduates by 25 percent and dentists by 20 percent over the next decade. Physician assistants and nurse practitioners are increasingly important in rural areas, and staff most retail health clinics. Onerous physician oversight requirements handcuff too many opportunities to give basic care.

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