Discount Medical Plan Summary Comments

1. Discount Medical PlanSummary Comments Seth M. Phelps, Assistant General Counsel 4800 Deerwood Campus Parkway, DCC1-7 – Legal Affairs Department Jacksonville, Florida 32246-8273 Discount Medical Plan Public Hearing - Conrad Hotel Miami, FL August 25, 2006

2. DMPO Comments • The DMPO law and regulations adopted by the OIR have served an important purpose in regulating a market that was previously unregulated and subject to abuse. • The prior DMPO marketplace needed regulation as certain market entrants misrepresented their offerings and took advantage of some Florida residents. • The regulations have had a positive effect in significantly reducing the number of complaints received by the OIR. • Anecdotally, I have observed a significant reduction in the number of misleading roadside and fax advertisements for DMPOs. No longer do we see as many signs advertising Discount medical plans with slogans like: • Affordable Health Care PlanPre-existing conditions? No problem!No Deductible or Co-paysThousands of providers in our PPO networkDiscounts up to 60% Discount Medical Plan Public Hearing - Conrad Hotel Miami, FL August 25, 2006

3. DMPO Comments • Despite the need for regulation, DMPOs are an important market segment and serve a limited purpose in the marketplace. • Some DMPOs offer concrete benefits to their customers and, if purchased by an informed public, can benefit select segments of consumers. Particularly valuable in my opinion are two types of discount medical plans. Those Discount Medical Plans where consumers can determine upfront their actual cost for services versus the monthly cost for the discount plan. In addition, discount medical plans, coupled with true insurance policies, offer consumers the benefit of discounts on services not covered by insurance and the peace of mind that they are protected from truly catastrophic medical situations. • However, DMPOs by themselves, are not a substitute for and cannot be rightly compared to comprehensive insurance coverage. • In some respects the DMPO marketplace has been quicker to provide innovative solutions to limited consumer problems than the insurance marketplace. Discount Medical Plan Public Hearing - Conrad Hotel Miami, FL August 25, 2006

4. DMPO Comments • While additional regulation of the DMPO marketplace may be necessary, more education and awareness among consumers of the purpose and value offered by discount medical plans versus traditional insurance should be a key element in any analysis of the current state of the market. • Given the push toward consumer directed health care (whether DMPOs or insurance) the most valuable tool in preventing abuse or fraud in the DMPO marketplace is an educated consumer segment that truly understands the differences between insurance and discount medical plans. Documents like the Federal Trade Commission’s: Consumer Alert entitled Medical DiscountPlans: They’re Not Health Insurance released in October 2005 are a positive start in this regard. • Since Discount Medical Plans are not insurance consumers need to understand certain realities. Here are two key concerns: • Discount Plans pay no actual benefits toward the cost of coverage. Thus, even with the discount, the consumer may still face a large bill, particularly with hospitalization or surgery. • Discount Plans are not insurance – as such if a person becomes sick while covered under such a discount plan, this may, in fact, make it difficult for the consumer to obtain actual insurance when they really need it. (At least in the case of individual coverage) • Finally, additional regulation of this marketplace should not serve as a hindrance to innovation and specialized discount plans that have value to consumers. Discount Medical Plan Public Hearing - Conrad Hotel Miami, FL August 25, 2006