In the wake of the inability of Senate Republicans to pass legislation to repeal the Affordable Care Act, the prospect of bipartisan solutions to the health care law's most vexing problems now appears more likely.

  • Sen. Bill Nelson proposes premium stabilization fund for health care
  • Similar to fund he helped create for Florida after Hurricane Andrew

Florida's Democratic senator is proposing a premium stabilization scheme modeled on the state's Hurricane Catastrophe Fund.

The fund was created in 1993 in the aftermath of Hurricane Andrew, a cataclysmic storm that wreaked billions of dollars worth of property damage. The resulting insurance claims caused premiums to soar, and many insurers began considering pulling out of the Florida market altogether.

With the advent of the fund, the state was able to offer insurers affordable reinsurance, which acts as a guarantee that the companies won't be required to bear the brunt of the multi-billion dollar claims payouts that can follow a major storm. Premiums fell and insurers continued doing business in Florida.

As the state's insurance commissioner in the 1990s, Sen. Bill Nelson told his colleagues on the Senate floor Tuesday, he came to appreciate government's unique ability to solve seemingly intractable marketplace problems. The catastrophe fund approach, he said, could be used to arrest skyrocketing health insurance premiums and keep insurers from leaving state Obamacare exchanges.

"That will insure the health insurance company against the catastrophic loss, which occasionally they will have," Nelson said. "And, you know? I costed that out in Florida, and it would reduce the premiums in Florida from the marketplace in Florida 13 percent. Now, that's real savings."

The Florida Catastrophe Fund, however, has its critics, who point to inequities in the way it's kept solvent. Every insurance customer in the state -- including non-homeowners who own auto policies -- pays a catastrophe fund surcharge, in effect subsidizing the costs associated with hurricane damage that principally occurs along Florida's coastline.

But that's how insurance works, some experts note.

"I think it could work and I think it's a great idea," said Bob Lotane, an insurance policy consultant who worked at Florida's Office of Insurance Regulation.

"As much as we pay for property insurance in Florida, it would be far worse without the Cat Fund, and the Cat Fund simply takes out the profit, takes out the taxes, and offers a more affordable product that's spread amongst everybody," Lotane said.

In his floor remarks, Nelson suggested the concept should have been part of the Republicans' original health care reform proposal, calling it a pragmatic way forward.

"That's just one solution of a fix. We ought to be looking at approaches like this," he said.