Dem Governors Opposing States’ Challenge to Federal Health Care Law
June 25, 2010 – A small group of Democratic governors wants to file a legal brief in favor of the recently enacted federal health care overhaul despite representing states challenging the legality of the federal effort.
The governors of Michigan, Colorado, Washington and Pennsylvania represent four of the 23 states whose attorneys general filed legal challenges to the federal health care overhaul President Barack Obama earlier cited as his “top” domestic priority. The attorneys general in each of the states the four governors represent are Republicans, who joined the legal challenge officially filed by Florida Attorney General Bill McCollum in March. The governors want to argue in favor of the federal health care law.
“The health care reform legislation passed by the U.S. House of Representatives last night clearly violates the U.S. Constitution and infringes on each state’s sovereignty,” McCollum said when announcing the legal challenge in March. “On behalf of the State of Florida and of the attorneys general from South Carolina, Nebraska, Texas, Utah, Pennsylvania, Washington, North Dakota, South Dakota and Alabama, if the President signs this bill into law, we will file a lawsuit to protect the rights and the interests of American citizens.”
The $938 billion health care package that largely begins to take effect in 2013 requires qualifying individuals without health insurance to purchase it or pay an annual $750 fine – unless the individual is a member of certain religious organizations, such as various Amish sects or the Church of Christ Science. It expands federal Medicaid health insurance coverage for the poor to people earning up to 133 percent of the federal poverty level – currently $10,830 for individuals and $22,050 for families with four members, and provides federal subsidies for qualifying individuals and families to help pay for health insurance coverage.
The legislation also creates health insurance exchanges for U.S. citizens to purchase affordable health insurance coverage with federal subsidies available for people earning up to 400 percent of the federal poverty level. Federal lawmakers say the health insurance mandate and creation of health insurance exchanges should help the estimated 31 million Americans currently lacking health insurance coverage to obtain it and force those who currently choose not to purchase health insurance to buy it.
The estimated cost of the health care reform plan – $938 billion over 10 years – is to be paid through increased taxes on individuals reporting more than $200,000 and couples reporting more than $250,000 in annual income. Taxes also will be levied on so-called “Cadillac” health insurance plans provided by employers and costing $10,200 annually for individuals and $27,500 for families, and tanning salons using ultraviolet lamps would have to pay a 10 percent excise tax. Capital gains taxes also will go up, in addition to several other taxes.
FEMA Denies Florida Request for Chinese Drywall Assistance
March 19, 2010 – Florida homeowners who unknowingly have had faulty Chinese drywall placed in their homes during the past decade won’t receive federal compensation after officials for the Federal Emergency Management Agency (FEMA) this week denied a request for financial assistance from Florida officials.
More than 2,500 residences have been identified by Florida officials as having lost value due to faulty drywall installed mostly in the early and mid 2000s and have nearly 90 other damage claims pending tied to Chinese drywall. Florida’s Lee County has had more than 1,100 homes damaged by Chinese drywall, and state officials have identified another 530 homes suffering metal corrosion after exposure to corrosive elements in some batches of Chinese drywall, the Insurance Journal reported this week.
Officials for Florida’s Division of Emergency Management last May requested financial aid through FEMA to help state homeowners afflicted with the bad Chinese drywall. State officials said Florida homeowners have “suffered greatly” and cannot afford to repair damaged homes, forcing many to move out to avoid possible health complications from noxious odors and fumes emitted by the bad Chinese drywall.
Federal officials said the bad drywall did not amount to either a disaster or an emergency qualifying for federal emergency-management funding despite much of the drywall having been placed in homes damaged by four hurricanes that pummeled the Sunshine State in 2004 and in the wake of 2005’s hurricanes Katrina and Rita.
Instead of requesting emergency relief funding, FEMA officials suggested Florida officials work with the U.S. Consumer Product Safety Commission and federal housing authority officials to obtain federal assistance first made available in December to homeowners afflicted with faulty Chinese drywall.
A recent federal study of 51 U.S. homes equipped with drywall manufactured in China indicates a “strong” link between in-home corrosion and drywall contents. Investigators from the U.S. Consumer Product Safety Commission with the help of Chinese officials recently conducted an indoor air study of dozens of homes recently equipped with drywall manufactured in China. Without declaring results conclusive, researchers say there is merit to the more than 2,000 complaints the federal agency has received from U.S. homeowners.
“We now can show a strong association between homes with the problem drywall and the levels of hydrogen sulfide in those homes and corrosion of metals in those homes,” investigators for the Consumer Product Safety Commission said in their announcement of results.
Research results indicated hydrogen sulfide gas emitted by contaminated drywall is the primary culprit in corroding copper and silver in homes equipped with Chinese drywall. Researchers also discovered elevated levels of formaldehyde in newer homes – whether or not they had Chinese drywall. Modern cabinetry and carpeting emit low levels of formaldehyde, according to researchers. Although formaldehyde and hydrogen sulfide gas amounts detected were too low to pose safety risks, federal investigators suspect a combination of them and other compounds commonly found in homes potentially might be harmful to structures and public health.
Officials for the Consumer Product and Safety Commission intend to work with federal lawmakers to implement corrective measures and look into potential health problems tied to the substandard drywall.
As the U.S. housing boom hit its peak near the turn of the century, a shortage of construction materials forced many builders to utilize drywall manufactured in China. Unfortunately, some Chinese drywall contains gypsum and trace elements of strontium sulfide, which can emit corrosive sulfuric compounds and an odor similar to rotten eggs.
A recent report by the Associated Press indicates some 500 million pounds of Chinese gypsum board was imported to meet domestic construction demands – particularly between 2004 and 2008 when thousands of homes along the Gulf of Mexico were being rebuilt in the wake of four hurricanes slamming into Florida during a month-long stretch in 2004 and Hurricane Katrina and Hurricane Rita destroying large areas of New Orleans and other Gulf Coast communities in 2005.
Federal officials estimate about 100,000 homes in the United States contain Chinese drywall. The total cost of replacing the faulty drywall could reach $25 billion, according to the Towers Perrin consulting firm. Some Chinese drywall manufacturers have said their products are safe and suggested bad gypsum tainted only some of the materials shipped to the United States in recent years. Many homeowners have blamed the Chinese drywall for corroding their homes’ copper pipes, causing other property damage and making family members ill.
State Farm Florida Refusing to Renew Home Insurance Policies
Feb. 1, 2010 – Officials for State Farm Florida recently announced thousands of existing customers in mostly coastal areas would receive non-renewal notices for their homeowners insurance policies starting this week.
The non-renewal notices will be sent to select State Farm Florida policyholders whose current insurance plans begin expiring on Aug. 1 and afterward. The notices are being sent as part of State Farm Florida’s efforts to reduce the insurer’s exposure to properties more likely to suffer extensive damages in the hurricane-prone state. Company officials said they are whittling away 125,000 of the about 714,000 properties currently insured through State Farm Florida, which is a subsidiary of State Farm Mutual Insurance and the largest private-property insurer in the Sunshine State.
The reduction in the number of properties insured is part of an agreement State Farm Florida officials reached with Florida insurance regulators after the insurer earlier declared its intent to cease insuring homes altogether in Florida.
Florida insurance officials in 2008 denied a request by State Farm Florida to increase its homeowners insurance rates by more than 47 percent after posting significant losses. The insurer has suffered severe losses since the state was pummeled by four hurricanes in one month during the 2004 Atlantic hurricane season. The insurer paid out billions of dollars in claims after the 2004 hurricane season, and its net worth decreased by nearly 25 percent since 2006. State Farm Florida officials say the homeowners insurance company has paid out $1.21 in claims for every dollar in premiums it has collected since 2000.
State Farm Florida borrowed $750 million from its parent company in 2005 and has not repaid the amount. State Farm Florida officials said without a rate increase, the company likely couldn’t continue insuring homes in the hurricane-prone state. The firm already stopped writing new homeowners insurance policies in Florida two years ago.
State Farm Florida officials last year announced a two-year plan to end its insurance coverages in Florida for homeowners, renters, condominium owners, personal liability, boats, personal articles and business property and liability. Although it is a private insurer, the move required state regulatory approval.
But instead of ending all homeowners insurance business in Florida, company officials reached an agreement with Florida insurance regulators allowing the insurer to reduce the number of homes insured in mostly coastal areas and increase its property insurance rates by almost 15 percent for homes and condominiums.
State Farm Florida Exit Hearing Postponed
Dec. 3, 2009 – An administrative hearing regarding a proposed exit from Florida’s homeowners insurance market by its largest player has been postponed until Jan. 25, although some speculate the hearing may never occur.
Florida insurance officials and officials for State Farm Florida – the Sunshine State’s largest private home insurer – are negotiating terms of the firm’s planned exit from the Florida homeowners insurance market. But the hearing might never happen if both parties agree to a plan allowing State Farm Florida to continue providing homeowners insurance coverage in addition to its other property and casualty insurance offerings.
Florida Insurance Commissioner Kevin McCarty previously said he wants to work out an arrangement enabling State Farm Florida to continue offering homeowners insurance and other property insurance coverages in the hurricane-prone state. McCarty in 2008 denied a request by State Farm Florida officials to increase homeowners insurance rates by an average 47.1 percent. The state’s Division of Administrative Hearings upheld the decision a year ago, which was appealed to and affirmed by the state’s First District Court of Appeals.
McCarty accused State Farm Florida officials of using the rate denial as a pretext to pull out of the state’s homeowners insurance market, but company officials claim financial realities are forcing the insurer to exit the market unless it can charge higher premiums.
“This is not an action we wanted to take but one we must take given the realities of the Florida property insurance market,” State Farm Florida President Jim Thompson said. “Faced with steeply declining resources to cover future claims and expenses, State Farm Florida has little choice.”
When initially denied the requested insurance rate increase, State Farm Florida announced a two-year plan to withdraw from the state’s property insurance market while continuing its life, health and auto insurance businesses. But Florida officials have denied the withdrawal request unless the insurer can find other private insurers to assume the more than 200,000 property insurance policies underwritten by State Farm Florida.
McCarty cited concerns that too many people would opt for the state-backed Citizens Property Insurance Corporation.
State Farm Florida officials requested the 47 percent rate hike after posting significant losses in recent years. The Florida subsidiary of State Farm Mutual Insurance has suffered severe losses since the state was pummeled by four hurricanes in a month during the 2004 Atlantic hurricane season.
State Farm Florida officials say the insurer has paid out $1.21 in claims for every dollar in premiums it has collected since 2000. The insurer paid out billions of dollars in claims after the 2004 hurricane season, and its net worth has decreased by nearly 25 percent since 2006. The insurer borrowed $750 million from its parent company in 2005 and has not repaid the amount.
China Assisting U.S. in Bad Drywall Investigation
Oct. 27, 2009 – Chinese officials are cooperating with U.S. investigators looking into a rash of bad drywall reportedly causing damage to homes and forcing homeowners to renovate or risk losing their homeowners insurance coverage.
Officials for the U.S. Consumer Product and Safety Commission are investigating claims of Chinese-manufactured drywall causing a variety of serious problems. China’s Administration of Quality Supervision Inspection and Quarantine is assisting in identifying specific problems.
Federal officials estimate about 100,000 homes in the United States contain Chinese drywall. The total cost of replacing the faulty drywall could reach $25 billion, according to the Towers Perrin consulting firm. Some Chinese drywall manufacturers have said their products are safe and suggested bad gypsum tainted only some of the materials shipped to the United States in recent years.
As the U.S. housing boom hit its peak near the turn of the century, a shortage of construction materials forced many builders to utilize drywall manufactured in China. Unfortunately, some Chinese drywall contains gypsum and trace elements of strontium sulfide, which can emit corrosive sulfuric compounds and an odor similar to rotten eggs.
Many homeowners have blamed the Chinese drywall for corroding their homes’ copper pipes, causing other property damage and making family members ill. Officials for the U.S. Consumer Product Safety Commission plan to raise the matter with Chinese officials. Among potential resolutions sought are having the Chinese government pay at least a portion of the cost to replace the faulty drywall and implementing regulatory standards to ensure similar products aren’t sold in the United States. But federal officials caution Chinese officials simply can refuse to cooperate.
A recent report by the Associated Press indicates some 500 million pounds of Chinese gypsum board was imported to meet domestic construction demands – particularly between 2004 and 2008 when thousands of homes along the Gulf of Mexico were being rebuilt in the wake of four hurricanes slamming into Florida during a month-long stretch in 2004 and Hurricane Katrina and Hurricane Rita destroying large areas of New Orleans and other Gulf Coast communities in 2005.
While construction crews and contractors quite innocently installed the Chinese-manufactured drywall thousands of homes in recent years, homeowners are getting a jolt from insurers who refuse to renew their homeowners insurance policies and refuse to cover claims, citing a manufacturing defect. Compounding the problem for homeowners is the requirement for insurance on financed homes. When an insurer learns a home contains Chinese drywall and ceases coverage, mortgage companies can foreclose on the homes for failing to provide proper insurance protection.
Officials for the U.S. Consumer Product Safety Commission said they have received 1,500 complaints of property damage and health problems from residents of 27 states and Washington D.C. Health-related complaints generally were about breathing problems, recurring headaches and nose bleeds.
Florida Business Group Urges Property Insurance Rate Increase
Oct. 22, 2009 – A Florida business group says the state’s public property insurance business is hurting for cash and needs at least an average 10 percent rate increase to remain solvent.
Florida lawmakers in 2002 created the state-backed Citizens Property Insurance Corporation to provide insurance protection to residents and businesses in the Sunshine State’s hurricane-prone areas. But if damages exceed available funds for property damage claims, property owners across the entire state are assessed to make up the shortfall. Floridians already are paying a 1 percent assessment to replenish the state’s Hurricane Catastrophe Fund, which was severely depleted after four hurricanes struck Florida within a month during 2004 and Hurricane’s Katrina and Rita inflicted more damages in 2005.
The Florida Legislature recently approved increasing premium rates to offset potential funding shortages if a major hurricane or other catastrophe were to strike. But state insurance officials and representatives of various special interests are at odds over how much rates should be increased.
Officials representing the Associated Industries of Florida are urging an immediate, 10 percent rate increase for all policies. But state insurance officials are proposing much smaller rate increases, saying the Legislature intended for some rates to increase and others to decrease with 10 percent being the maximum potential rate hike.
Citizens has a $4 billion surplus, but officials for the Associated Industries of Florida say the state-backed property insurer currently has $413 billion in exposure on the more than 1 million properties it has underwritten. A 10 percent rate hike would be sufficient to raise more than $211 million needed to bridge a potential budgetary gap if a Category 2 or stronger hurricane were to strike, according to Associated Industries officials.
But state officials are proposing rate increases of between 5 percent and 10 percent, saying a sudden 10 percent jump in insurance rates would be too burdensome on homeowners and job providers already struggling to make ends meet in a down economy.
State insurance officials are proposing rate increases of 1.8 percent for mobile home owners, 5.4 percent for homeowners and 8.8 percent for dwelling fire insurance protection. Increases of 2.1 percent for mobile home physical damage insurance and 10.1 percent for commercial properties and homeowners association insurance plans also are proposed. If approved, the rate increases would take effect in January.
The proposed rate increases are much lower than officials for Citizens Property Insurance Corporation have expressed as necessary to adequately fund the state-backed program. Citizen’s actuaries have said rates need to go up by my more than 10 percent for commercial residential properties, such as apartment complexes, 40 percent on private homes and 140 percent for wind-only commercial policies to properly fund the program.
State insurance regulators have scheduled a hearing on Nov. 10 to address the matter.