Selling health insurance across state lines is one of the central planks of the GOP’s plan to replace ACA. Intended to foster competition and reduce costs, the idea is the more insurers competing for customers, the lower the price and better the product. And by eliminating the requirement that insurers comply with state mandates, costs would be lower because some services, conditions, and treatments would not be covered.
In addition to these issues there is one real example that should sharpen our thinking.
Today three states allow citizens to buy insurance offered by out-of-state insurers. Maine, Wyoming, and Georgia have all allowed this for over a year, yet no out-of-state insurers are offering plans in those states.
the question is why?
Folks advocating this idea base their view that selling coverage across state lines will reduce costs by eliminating mandated benefits, which some think would reduce costs 30-50 percent.
That view reflects a lack of understanding of the cost drivers in health insurance, the primary driver being – you guessed it – the cost of medical care. While mandates do influence costs, the underlying cost of insurance is the cost of care. And health care just costs more in Portland Maine than it does in Boise Idaho
There’s another concern that hasn’t been broached, perhaps because it is politically charged. States have significany regulatory authority over benefit design and mandates. Allowing the sale of non-compliant insurance in a state may well be anathema to those strongly supporting state sovereignty.