The trouble with letting insurers sell plans across state lines

While some Republicans are proposing to let insurers sell national plans to expand consumer choice and lower costs, many healthcare experts say this idea wouldn't increase market competition, according to an opinion piece in The New York Times

Creating a national health insurance market has been a popular idea among a handful of Republican presidential nominees since 2005, notes columnist Margot Sanger-Katz. GOP lawmakers have said that allowing insurers to sell across state lines would reduce the red tape associated with state insurance regulation. Plus, they say, insurers would be able to choose the states in which they want to base their companies.

The issue came to light recently when Donald Trump said he would support insurers selling national plans across state lines during a Fox News Republican debate.

However, healthcare experts say the factors preventing insurers from entering different markets aren't regulatory; they're related to financial and provider network issues.

"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," Merrill Matthews, a resident scholar at the Institute for Policy Innovation, tells the Times.

Experts also are concerned that allowing insurers to choose where to locate their companies could lead to many insurers locating in whatever state offers the fewest regulations. This, in turn, could destabilize risk pools in more-regulated states.

Others worry that if states open their borders to all insurers, some states will roll back certain mandated benefits and drop basic consumer protections. It's possible that those low-risk consumers who need these certain mandated benefits will be drawn to that state, causing an adverse selection effect.

Ultimately, the plan is "not a silver bullet," Sanger-Katz writes. What's more, insurers haven't shown any support for Republicans' national plans. America's Health Insurance Plans and the Blue Cross Blue Shield Association haven't endorsed any plans when Congress has considered them, the Times noted.

To learn more:
- read The New York Times article

 

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