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Business Observer Friday, Aug. 31, 2012 6 years ago

Capitol Chatter: August 31

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The weekly roundup of what's happening in government and how it affects business.
by: Rod Thomson Staff Writer

State still fighting bills on 'Taj Mahal' courthouse
The state of Florida is still trying to limit the damage done by an opulent courthouse built in Tallahassee nicknamed the Taj Mahal, this time by blocking payment for $357,500 worth of artwork.

The $49 million courthouse has thousands of feet of African mahogany, granite-top desks, 60-inch flat screen televisions in each judge's chamber and more that has led to more outrage than awe.

Gov. Jeb Bush threatened to veto appropriations for the building in 2006 because of the price tag and amenities. He was assured by the judges that they would scale it back and he left the first round of money in. In 2007, another $7.9 million was authorized at the request of the judges. But in the hairy final days of the legislative session, the judges got lawmakers to add another $33.5 million for a bond issue to pay for the building.

The overboard cost and lavishness led to inquiries as to how it got so out of hand and ultimately to the resignation of Chief Judge Paul Hawkes.

State Chief Financial Officer Jeff Atwater is now rejecting payment of $357,500 for historic photographs after a hearing officer recommended denying the payments to Signature Art Gallery. However, there are still a pair of legal cases pending regarding the payment for the photos.

Expected no-fault savings could actually evaporate
It is now sounding possible that there will be no real savings from the no-fault insurance reform passed during the last session to curb corruption and lower premiums.

The Florida Office of Insurance Regulation conducted an analysis of the legislation and released a draft a month ago in which Pinnacle Actuarial Resources Inc., a consultant hired by the state, found that no-fault insurance premiums could fall by 12%-20%.

At the time, state regulators quickly played down that possibility of declining premiums, ticking off reasons why that might not happen. Those reasons include how judges might rule on challenges to the law and the full impact of the changes on the abuse in the system.

“The final conclusions may, and probably will, change prior to the report being finalized,” spokesman Jack McDermott wrote when the draft study was released. It's almost like he knew what was coming, because the OIR has released the final report and is now saying that there may not be any savings — or at least reductions — showing up in consumers' bills.

The finalized report says that the law will mean reduced losses of between 14% and 24% on the no-fault portion of a person's auto insurance bill. No fault, or PIP for personal injury protection, makes up about 20% of the overall insurance premium.

However, reducing those losses does not mean reduced premiums because the PIP rates have not kept up with the fraud and abuse that has driven up payouts.

Those payouts had been rocketing from abuse. While car crashes and injuries declined from 2007-2010, PIP payouts increased 66%. In 2010, insurers paid out $1.04 for each $1 in premiums they took in even though rates have been rising 50%-70%.

The OIR's conclusion that there could be no reduction in premiums is problematic considering what is in the law — a mandated 10% reduction in premiums in 2013 and then a 25% cut in 2014. But the law also gives insurance companies an out from complying with the mandatory cuts as long as they can persuade the OIR they have a good reason.

The fact that payments still fall short of payouts would be a likely reason they would give. We'll find out Oct. 1 when insurers file their rate requests with the state.

Medicare is in the air, but will there be a scare?
Medicare is long considered a third rail of American politics: It cannot be touched without getting burned.

That was the immediate conventional wisdom on the choice of U.S. Rep. Paul Ryan as Mitt Romney's running mate for president. But on a national level and in Florida polls, Ryan's choice and his supposedly toxic plan to reform Medicare have not done any damage and has possibly helped.

However, his choice has injected Medicare into the Florida Senate race between incumbent Democrat Sen. Bill Nelson and his Republican challenger, Rep. Connie Mack.

With Florida's elderly population, that is seen as a dangerous proposition for Mack. But Republican and Democrat strategists in Florida say it's likely that the Senate undercard race outcome will be knit tightly to the presidential race. If Romney wins Florida, Mack probably wins, and vice versa.

So expect to see the political “messaging” on Medicare between the Romney and Mack campaigns to be coordinated and tight, while the attacks on the Ryan plan by President Obama and Nelson will also likely be coordinated.

Hospitals fighting state rule changes
Saying that state rule changes could mean a 10% decline in reimbursement for outpatient services, the Florida Hospital Association is taking its case to court.

The Florida Department of Financial Services Division of Workers' Compensation published a new set of proposed rule changes in July on state reimbursement rates for hospitals covering outpatient treatment for people under workers' comp insurance.

The association has filed a legal challenge with the Florida Division of Administrative Hearings to stop a rule change by the state's financial services division.

The hospital association calls the changes “radical” and is asking a hearing judge to block them taking effect.

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