The premise that selling health insurance across state lines is “the magical pill” to save the health insurance market is the biggest load of bullshit since Obama said “you like your doctor, you can keep your doctor”. The GOP claims that cross-state selling will make insurance so affordable, and so terrific, that everyone will not be able to contain themselves from flooding the market to buy health insurance like its a goddamn new iPhone! There is NOTHING that gets people fired up, like paying monthly insurance premiums for services they hope they never have to use… Regardless, the underlying idea is that adding insurers and policies into markets will boost competition and reduce costs – which sounds great from a philosophical perspective, but is also a bunch a bullshit and completely impractical.
Funny enough, the issue with this philosophy isn’t overbearing federal restriction on selling insurance; it’s the individual laws within states. To be clear, there are currently ZERO federal restrictions on selling health insurance across state lines, so insurers could sell across lines today if they wanted (a few have actually tried and failed miserably). Like most state laws, they can vary widely from state to state depending on their individual population dynamics. For example, Nevada may have vastly different chiropractic requirements for insurance policies compared to Maryland. In aggregate, all of these specific state regulations can be major barriers for out of state insurers. In addition, insurers must set up doctors networks and competitive reimbursement rates within the expanded market. In addition, negotiating competitive rates is a major challenge without significant competition. Lastly, health care costs vary across state lines, so a cheaper plan in Alabama will not bear the same costs in New York – insurers could take a loss charging a consumer in New York the same premium as a consumer in Alabama for the same coverage.
The Center on Health Insurance Reform conducted a study in Six States which all had legislation specifically aimed either to study or actively promote selling across state lines. Unfortunately, given the challenges mentioned above, NOT A SINGLE insurer sold a SINGLE product into a new market. I repeat, NOT A SINGLE INSURER SOLD A SINGLE PRODUCT INTO A NEW MARKET.
Here are the summary of the findings:
- To date, although all states have long had the authority to do so, only six have enacted across state lines legislation.
- Across state lines legislation was largely unsuccessful because of the localized nature of how health care is delivered
- Practical barriers and administrative obstacles also hinder success.
- Once enacted, these laws appear to lack any organized champion
- These cross-state proposals fail to address underlying differences in cost from state to state
In short, even a concerted effort by states to promote cross-state selling failed due to (1) burdensome STATE regulations and resources needed to expand into new markets and (2) the new policies were not well received in the market itself (which is the entire impetus behind the policy in the first place). Ironically, the only way to sell across state lines without dealing with burdensome state regulations, would be to establish federal plans that could be sold regardless of state regulations (which may be unconstitutional, I have no idea). So in order for Republicans to get this to work, they would have to supersede state’s rights, for “BIG government” federal oversight….. you would have a better shot at catching Paul Ryan taking a shit on the White House lawn than doing what I just outlined.
So why are Republicans claiming that selling across state lines is the magical pill we need to fix our healthcare system? Because they don’t have a real plan to actually fix healthcare, they just want to reduce government at all costs unless it has to do with national “defense” or homeland security.