WASHINGTON, D.C. — As many as 2 million Floridians could see lower health insurance premiums or get rebates next year now that the Obama administration has denied Florida's request to waive new cost-cutting rules for the state's insurance providers.

Under last year's health care reform law, insurers must spend at least 80 cents of every premium dollar on medical care as opposed to administrative costs, brokers' fees or profits. Companies that spend less must rebate their customers the difference.

Florida Insurance Commissioner Kevin McCarty had asked the federal government to delay the requirement for three years for insurers in the individual health market, which serves people who don't get insurance through their employer or the government.

Federal health officials said Thursday they had denied the request.

Based on 2010 calculations, insurers in Florida would have to rebate customers as much as $174 million over three years if they don't meet the 80-percent requirement, according to records the state filed as part of their waiver application.

A larger number of consumer groups opposed Florida's request for a waiver than opposed similar requests from 16 other states, said Steve Larsen, director of the Center for Consumer Information and Insurance Oversight at the U.S. Department of Health and Human Services (HHS).

"We think that this is a very good decision for the insurance consumers in the state of Florida," Larsen told reporters Thursday. "It's going to continue to ensure that they will get value for their premium dollars."

There are conflicting estimates on how many Floridians are covered through the individual market and therefore could be eligible for rebates.

In its waiver application, the state said about 842,252 people are covered through the individual market. But the number could be more than 2 million, based on census data.

The insurance industry said some insurers would leave Florida if the waiver wasn't granted. Independent insurance agents already are reporting layoffs as insurers cut commissions to meet the new requirement.

McCarty's office said it was "disappointed" in the ruling.

"The office believes the evidence obtained during the two public evidentiary hearings in 2010 supports the assertion that an immediate imposition of (the 80-percent requirement) will destabilize the individual market in Florida," according to a statement issued Thursday.

McCarty had asked for the delay to give insurers and brokers time to adjust to what he called "monumental shifts in standard industry practices." Without such flexibility, he said, insurers — especially new entrants facing high start-up costs — would leave Florida, limiting choices for state residents.

But with 20 insurers in the individual market — more than most states — the new rule is not expected to limit consumer choice much, Larsen said.

Carmen Balber, Washington director for Consumer Watchdog which wrote HHS to oppose the waiver, applauded the administration for rejecting Florida's request.

"It's no surprise that Florida politicians who are staunch opponents of reforming the health insurance industry, tried to evade the only provision in the law that requires health insurance companies to make insurance more affordable by cutting bureaucratic waste, executive salaries and excessive profits," she said.

The federal law trumps Florida law, which allows insurers to spend as little as 65 percent of premium money on medical treatment, depending on the plan.

To avoid paying rebates, insurers across the country are reducing commissions paid to brokers and lowering premiums, according to the Government Accountability Office, the investigative arm of Congress. Brokers say the new rule will force them to lay off agents because broker fees are considered administrative costs under the new rules.

The state's largest insurer, Blue Cross & Blue Shield of Florida, which serves 40 percent of the individual market, already meets the 80-percent requirement.

Consumer Watchdog also notes that Republican Gov. Rick Scott opposes the health care law and has declined to apply for or accept millions in federal grant money associated with it. One in five Floridians is uninsured.

Twelve of the 20 insurance companies operating in Florida's individual market spent less than 80 cents per dollar on treatment in 2010 and would have to rebate customers a total $76.1 million next year, $50.6 million in 2013 and $47.2 million in 2014 if they don't cut administrative costs, according to state records.

The 12 are: American Republic Insurance, AvMed, Connecticut General Life Insurance, Coventry Health Plan of Florida, Freedom Life Insurance, Golden Rule Insurance, Humana Health Insurance, John Alden Life Insurance, Mega Life & Health Insurance, Mid-West National Life Insurance, Preferred Medical Plan, and Time Insurance.

Golden Rule is the second-largest provider in the individual market, serving more than 118,000 Floridians, according to state records. It spends 68 percent of its premium money on health care, state records show. Without a waiver, the company projects it would have to pay $32.8 million in rebates next year.

Insurance brokers have voiced concerns as well, saying their commissions will be among the first expenses insurers will eliminate to reach the 80-percent threshold. Losing those commissions would eat into already slim profit margins and force them to lay off workers, they said.

Many of the roughly 4,000 agents with the National Association of Insurance and Financial Advisors-Florida said in a recent survey they've already been told by insurers that their commissions will decrease at least 30 percent.

Contact Ledyard King at [email protected]