Home » Selling health insurance across state lines is not that simple

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Selling health insurance across state lines is not that simple — 19 Comments

  1. Neo,

    Your complaint near the end that “it is already completely legal…” to sell across state lines is belied by an article statement listed earlier.

    “Several states, including Georgia, Maine and Wyoming have passed laws allowing companies …”

    So states that are NOT Georgia etc. are states where it is illegal. Perhaps you meant to say that it is already federally legal to sell across state lines. I’m guessing that there are state laws preventing this. I know that CA uses an iron fist and a million pages of regs. to throttle insurance corps. operating here.

  2. Selling health insurance is not a problem at all. You just sell it to the people who can afford it.

    I’m being glib, but really it’s not capitalism in any way shape or form to make something affordable by such convoluted artifices.

    At least not laissez-faire.

    Speaking of how sellers are suppose to use a system which is not designed to do this at all, is why there are all sorts of problems.

    I am Captain Obvious.

  3. A knotty problem without a simple solution.

    According to the WA state insurance commissioner’s site: In 2015 WA had twelve insurers selling 143 plans on the Obamacare exchange. Additionally, eight insurers sold 67 plans outside the Obamacare exchanges.

    Those facts would seem to offer a fair degree of competition, but some companies will only insure in the major populated counties and some do not have agreements with certain hospitals or doctors. Such has been the case for our daughter. There is only one insurer who provides coverage at hospitals and doctors she wants to use. (She knows the medical field pretty well.) As far as she is concerned that company has a monopoly. Her premiums and deductibles have gone sky high under Obamacare, but because she is a small business person who earns above the subsidy level, no one who favors Obamacare cares.

    Yes, there are big barriers to selling all over the U.S. Yet there are a few companies that do sell in many states such as United Healthcare, Kaiser, Anthem, Blue Cross/Blue Shield, and Aetna. These companies have all done quite well under Obamacare, so maybe there is a model for a few huge companies to compete all over the country. I’m sure they would not like such a model.

    The real answer to reducing insurance costs is reducing medical costs – an issue that Obamacare didn’t address and Trump is unable to do until he can get rid of Obamacare and work on things that actually bring down medical costs. Steps such as these suggested in this article:
    https://www.forbes.com/sites/realspin/2013/03/20/to-bring-healthcare-prices-down-consumers-must-demand-price-transparency/#1b3ef015ae27

  4. TommyJay:

    Yes, of course we are talking about federally legal, because the context is federal action by the GOP in Congress to replace or reform Obamacare. The US Congress can only pass federal laws that affect every state. So they can either allow states to do it or prohibit them. Right now it is allowed, but many people seem to be under the mistaken impression that it is forbidden.

  5. I ran across this article some time ago about the factors causing premium prices to rise and the two big ones were guaranteed issue (15-30%) and community rating (19-35%), followed by essential health benefits (8%) and actuarial value (8.5%) Namely Obamacare regulations.

    This analysis is about increases, so it doesn’t deal with possible factors that might have kept premiums from rising even more.

    http://dailysignal.com/2017/03/23/to-lower-premiums-congress-must-roll-back-obamacare-regulations

  6. J.J.:

    Many insurance companies sell policies in many states. But they have very different prices, rules, and networks in those different states. They are not the same policies and are therefore not portable as is.

  7. Yes, there are lots of local hospital groups that would need to be considered, but Blue Cross/Blue Shield ought to be ready to go national on short notice. Ditto Aetna or Kaiser or several other health insurance companies that have artificially segregated their operations state by state.

    And one good point; if you get sick away from home, having a national health insurance plan would make things a LOT easier.

  8. “Nobody knew that health care could be so complicated.” Donald Trump.

    Everyone but Trump knew this….

  9. Ken Mitchell:

    As the articles point out, the segregation is not “artificial.” States are very different, and to be ready to go would require a lot, and in addition insurance companies would not necessarily want to set up shop in every state.

  10. Don’t cover preexisting conditions.

    Problem solved, and we can go back to being free to live our own lives again.

    Or we can continue being the miserable slaves of the irremediable dysfunctions of others.

  11. I wonder if for those with “pre-existing conditions” it would be possible to break insurance into actuarial insurance for everything else but, and some kind of government program for the say, condition of self-induced diabetes.

    Spillover effects through the body probably makes that impossible.

    I guess we should just all be wise enough to make sure that we never share a political space with people having these kinds of problems.

    Also wonder how long it will be before progress in genetic medicine makes much of this discussion moot.

    Soon, I hope.

  12. Neo: “Many insurance companies sell policies in many states. But they have very different prices, rules, and networks in those different states.”

    Just so. Washington state is particularly tough to do business in. The state regulations here are quite draconian. They were not as bad as Obamacare, but enough so that the state transitioned to Obamacare without missing a beat.

    That is one nice thing about Medicare. It covers you everywhere in U>S. Outside the U.S.? Well, there is a travel insurance industry that provides that coverage. We’ve never had to use it, but know two people who have. Veritable life saving stuff. Both suffered falls with broken bones, emergency hospitalization, and evacuation back home. Don’t leave home without it.

  13. J.J. Says:
    May 9th, 2017 at 5:16 pm
    Neo: “Many insurance companies sell policies in many states. But they have very different prices, rules, and networks in those different states.”

    Just so.

    * * *
    Exactly the point. Since every state wants to tell you what kind of insurance you can or can’t have, at whatever prices they think are reasonable, there is no real portability of insurance if you move to another state.

  14. Every state has an Insurance Commissioner, usually elected, and a huge regulatory Department of Insurance.
    A majority of the recently elected Insurance commissioners of Louisiana are now convicted felons.

  15. I’ve been skeptical that buying accross state lines would substantially reduce the cost of health care. Certainly it won’t hurt, it offers a hedge against monopoly, and there isn’t any reason not to allow it (ok, so a company may not find it profitable, but that’s no reason to prohibit them from doing so).

    On the other hand, I do question some of these statements “attracting enough customers to create a large enough risk pool” why can’t insurance companies selling across state lines add interstate customers to existing risk pools? If I’m selling insurance across county lines in New York, why can’t I sell across the state line into New Jersey? That sounds suspiciously superficial to me.

  16. Seems to me the difficulties of selling across state lines is overstated. If I get sick out of state, BC/BS covers me. The policy is through my employer, not an obamacare exchange.

    Seems to me that it wouldn’t matter where the policy originates from, as long as the company pay the bills it’s contracted to pay IAW the policy. Either X amount per visit or day in the hospital, or X percent of the bill.

  17. “selling across state lines” was one of those things everybody said without wondering where the magic was.
    As has been noted, each state has its own insurance regulations. That’s not a problem. The company designs a policy which will fly in the state in question, files it, and gets approval.
    Point is, it’s not like the ones in a neighboring state.
    Much of the reasoning, such as it is, has to do with premium. And premium has to do with local health care costs. Usually it’s highest in a major urban area and might be fifty percent less far outstate for the same policy. So if you see a cheap premium in downstate Indiana, don’t think they’ll sell it to you if your address is in Evanston, state lines notwithstanding.
    Some contracts–few–had a network in which coverage was good and none outside the network. Some had coverage in a network which was better than if you had to go outside the network, but you got coverage either way. And some did not have a network and coverage was wherever you got it. The last was usually more expensive. The network-only plans were rare and not popular with employees if the employer used it.

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