Floridian of the Year
Pat Geraghty, Florida Blue CEO, is Floridian of the Year
The Legislature wasn’t sold, however, and refused the expansion. House Speaker Will Weatherford called the federal government approach “take it or leave it, all or nothing” and said it was unsustainable, relied on borrowed money, not Floridians’ tax dollars, and would cost the state $3.5 billion over a decade as well as impact spending on education and other state needs. He backed a state House Republican measure that he said was sustainable and would cover 55% of the people the Medicaid expansion would cover.
Geraghty says he will continue to urge legislators to take the Medicaid money. He says it’s important for the company to be a “thought leader” in health care policy with the courage to speak out on state and national policy. Unusually visible for the CEO of a Blue, Geraghty has appeared in the New York Times and on Fox Business News and MSNBC, among others.
Regardless of what the Legislature does this spring with Medicaid, Florida Blue is poised to make Medicaid big business. Through a partnership, it won bids for the Medicaid business in eight of Florida’s 11 Medicaid regions for which it bid. “We will be a large Medicaid player by the middle of (2014),” Geraghty says.
Meanwhile, Geraghty has to navigate the new federal law. The company made headlines when it began canceling plans that didn’t meet the law’s new mandated coverages, affecting 300,000 Floridians. The day of Geraghty’s interview with Florida Trend, President Obama was in Massachusetts saying such policies were substandard and from “bad apple insurers.” Florida Blue answers that its “Go Blue” product responded to customer demand for a plan not intended as a full insurance plan but one that offered protection that met customers’ budgetary and lifestyle needs. Obama, after much criticism over the canceled plans here and in other states, granted them a reprieve for a year even though they didn’t meet the new federal requirements. Florida Blue said it will offer customers renewals.
Geraghty supports the law. The deal implicit in the act is that insurers take costly sick and high-risk people without excluding any with pre-existing conditions and without charging them commensurately with the risk they represent. In return, in theory, the law — by mandating coverage — is supposed to deliver new, healthy, high-margin, premium- paying customers.
Geraghty says providing coverage for pre-existing conditions and for children of policyholders up to age 26 is popular and appropriate. Where he and the law part ways is over its shrinking of age-rating premium categories. In the individual market before the law took effect, Florida limited how much an insurance company charged an older customer — say, near retirement — to seven times what it charged a younger one for the same coverage. The federal law restricts how much premiums can vary based on a person’s age to three times. While that’s better for older customers, it means younger ones pay more to in effect subsidize them. Geraghty worries it will drive young people out of the market.
By the end of October, a day short of the first full month of the Obamacare exchanges, Geraghty — obeying the federal government’s instructions that data releases come from Washington — would say only that more than 1,000 people had signed up for Florida Blue policies through the healthcare.gov website.
A Florida Office of Insurance Regulation report says that on average Florida Blue premiums will go up 31% under the Affordable Care Act. Says Geraghty, “This is a place where averages lie, OK?” A young, healthy customer earning too much for a government subsidy might see his premium double while a chronically ill older person might see a 20% reduction. “It really depends on who you are, whether or not you’re advantaged or disadvantaged by the law in the final analysis,” he says.
The individual market, as much as it has been in the news, accounts for less than 10% of Florida Blue’s insurance base.
Throughout its insurance lines, Florida Blue has to find a way to lower costs. Its overall underwriting gain in 2012 was $68.5 million, less than half the $152.8 million Florida Blue gained in investment income.
To lower costs and improve care, Florida Blue is trying the “medical home” approach, which now includes 2,300 doctors. A patient’s care is led by a single physician who coordinates the care provided by others. As part of the effort, the company pays primary care doctors to keep offices open for longer hours to cut ER use and gives incentive pay for quality care. Florida Blue also has agreements with accountable care organizations, in which hospitals, doctors and other providers coordinate care on a value-based compensation model.