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March 7, 2017

The Problem with Republican Plans to Sell Insurance Across State Lines

IPI expert referenced: Merrill Matthews | In The News | Media Hit
  Daily Kos

Donald Trump and other Republicans have repeatedly talked about how great it is going to be when insurance companies can finally “sell across state lines.” 

The Affordable Care Act already allows for this and insurers aren’t interested. But the GOP wants to remove mandates 

In the GOP’s ideal world, companies would be selling insurance across state lines without the mandatory coverage requirements of ObamaCare.

The New York times had a great article about this in 2015 The Problem With G.O.P. Plans to Sell Health Insurance Across State Lines

“The barriers to entry are not truly regulatory, they are financial and they are network,” said Sabrina Corlette, the director of the Georgetown University Health Policy Institute.

In 2012, Ms. Corlette and co-authors completed a study of a number of states that passed laws to allow out-of-state insurance sales. Not a single out-of-state insurer had taken them up on the offer. As Ms. Corlette’s paper highlighted, there is no federal impediment to across-state-lines arrangements. The main difficulty is that most states want to regulate local products themselves. The Affordable Care Act actually has a few provisions to encourage more regional and national sales of insurance, but they have not proved popular.

Insurers have been muted in their enthusiasm for G.O.P. across-state-lines plans. Neither America’s Health Insurance Plans, the lobbying group for most private insurers, nor the Blue Cross Blue Shield Association have endorsed such a plan when it has come before Congress.

Some key findings from Corlette’s report Selling Health Insurance Across State Lines: An Assessment of State Laws and Implications for Improving Choice and Affordability of Coverage

Key Findings

  • To date, although all states have long had the authority to do so, only six have enacted across state lines legislation. Georgia, Maine and Wyoming enacted legislation allowing the sale of insurance across state lines. In addition, Maine and Wyoming encourage the formation of interstate compacts. After failed attempts to pass across state lines legislation,Kentucky, Rhode Island and Washington enacted legislation requiring their insurance departments(DOIs) to research and evaluate the feasibility of allowing the sale of policies across state lines or forming interstate compacts.
  • The stated purpose of laws permitting the sale of health insurance across state lines and the formation of interstate compacts were largely similar across the states. 
  • Across state lines proposals have been unsuccessful at meeting their stated goals.
  • 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.

In my area of rural Northern California no GPs or pediatricians are taking new patients, even with private insurance. It is impossible to find providers who accept Medi-Cal or Medicare. Rural areas across the US are experiencing extreme shortages of doctors and nurses. Populations of different states and regions have varying health care needs. Insurance companies can’t just devise one policy for everyone. 

“I’ve tried for 10 years to explain this to Republicans; it is a big problem,” said Merrill Matthews, a resident scholar at the Institute for Policy Innovation, which focuses on free-market solutions to policy problems. “Just because a good affordable policy is available in another state doesn’t mean that I would be able to get the network of physicians and the good prices that are available in that other state.”

Aside from making health care affordable, we need to address making it available. And that starts with educating doctors and nurses in an affordable way. Making medical school free would be a good first step. 


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