Does anyone know how the Democrats’ health care reform package proposes to prevent the insurance companies from pulling a similar scam?
The largest homeowners insurer in Florida is canceling the policies of 125,000 of its most vulnerable customers beginning Aug. 1, halfway through the 2010 hurricane season.
The company, State Farm Florida, began sending out cancellation notices this week to nearly a fifth of its 714,000 customers, most of them in the state’s hurricane-prone coastal regions.
A spokesman for State Farm said the decision was the direct result of its failure to win a 47.1 percent rate increase from state regulators.
State Farm stopped writing new policies and sought the increase a year ago, saying severe losses from a series of devastating hurricanes in recent years had rendered its business model unworkable. It said that without the large increase, it would be insolvent by the end of 2011.
Suppose there’s a couple of bad flu seasons. Then the next year the insurance companies, one by one, no collusion here, begin demanding 50% rate increases for health care insurance policies, and end up negotiating a deal with the relevant government merely to cancel the insurance of a fifth of their customers. As long as they don’t cancel you for pre-existing conditions or because you’ve hit some lifetime limit, they’re good, right? We can’t force the companies to stay in business, at least in the current environment.
And of course there’s about three-quarters of a million Americans going bankrupt each year at least in part because of medical bills despite having health insurance. What do the Democrats propose to do about this?
They appear to have failed entirely at the one project they set themselves for this year, thus yielding what the Village Voice called a 41-59 majority for the Republicans.
But there’s a positive side, it appears.
David Miller, president of Brightway Insurance in Orlando and Jacksonville, saw a silver lining to the announcement. Spreading State Farm’s customers around to other companies will make the homeowners insurance market more competitive, and the canceled State Farm customers will likely get a better deal from their new insurers, he said.
“I think when they go to shop … they’re going to find that there are actually some tremendous savings, and this could end up being a blessing in disguise for many people,” Miller said.
Which makes sense. Insurance salesfolk are known to lend a sympathetic ear and policy to people in need.