The readers’ forum

What is Florida Blue really up to?


Florida Blue is up to some legal black magic. It is fast tracking a major corporate restructuring that moves $1.6 billion of surplus funds to a non-insurance, for-profit company. This isn’t fair and equitable to policyholders. Policyholders should vote down the $1.6 billion transfer and the new mutual insurance holding company that Florida Blue executives want to create.

There are several reasons why policyholders shouldn’t approve this proposal by Florida Blue executives.

First, $1.6 billion in surplus funds would be transferred from Florida Blue to a new non-insurance affiliate, a for-profit stock company called Guidewell Health. This raises a host of issues. Clearly, Florida Blue’s premiums have been too high, otherwise a staggering $1.6 billion in surplus funds would not have been accumulated. Policyholders should get a rebate from these excess funds that they were overcharged in premiums.

Florida Blue wants to transfer the money to a company that isn’t an insurer and isn’t required to provide information on how the funds will be used.

Second, Florida law does not include a current version of the model holding-company statute as recommended by the Florida insurance consumer advocate. It would require basic financial reporting on all parts of the new corporate structure. If the Florida Blue restructuring takes place, the new affiliated companies would not publicly report this financial data. This could significantly reduce state regulation and transparency, which protects policyholders. From a regulatory point of view, it will be difficult for the state to monitor “enterprise wide risk” and to assess the health of the group.

Third, Florida Blue claims that this restructuring is needed for it to diversify into a “health solutions” company, but it has refused to provide a vision or strategy to accomplish this. Policyholders have every right to expect that their premium dollars will be used to pay for the care that they need, not to fund unrelated activities at the whims of executives.

Finally, Florida Blue has taken measures to obtain quick approval for its mutual insurance holding company and the associated transfer of $1.6 billion in funds. A special amendment drafted by Florida Blue passed the Legislature in April without being heard by a single committee; on July 25, the Office of Insurance Regulation (OIR) held a public hearing in Miami; and on Aug. 16, OIR approved the corporate restructuring. Florida Blue has announced a policyholder meeting for Sept. 10 in Jacksonville to seek policyholder approval. This is a speeding train destined for a wreck, and policyholders should reject it.

Tony Fransetta, president, Florida Alliance for Retired Americans

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