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Health Care:"Across State Lines"? Nobody Wants It

Category: Health Care
Posted: 04/23/17 13:17, Edited: 04/23/17 13:18

by Dave Mindeman

OK - can we debunk this once and for all? I'm talking about this Republican fantasy that selling insurance across state lines is some kind of competitive fairy tale that will solve the health care crisis.

Politico finally put together an in depth article about it....

Trump's Next Big Idea On Health Care

It goes into some of the problems I have talked about before, plus some other things I didn't know.

Here is the biggest problem....

"The president clearly is committed to the state-line policy. If he wants a small win on health care to distract from the challenges of getting a large-scale repeal through Congress, this idea might meet that goal. But there's one big problem: No one in the health care universe, on either the policy side or the business side, actually thinks selling plans across state lines will make a difference."

So, why is nobody, outside of Republicans in Congress and the President, pushing this forward?

1. It's unlikely to be profitable. Established insurance companies consistently say that they wouldn't pursue this opportunity under any regulatory circumstances. Even if state and federal legislators were to do all the heavy political and regulatory lifting, at best a few niche startups would try selling stripped-down policies in high-cost states--probably under the intense scrutiny of the dismayed insurance commissioners from those states. And since these changes wouldn't apply to most people currently covered by their employers or traditional Medicare or Medicaid, or the Veterans Affairs health system, or the Department of Defense, the opportunity for profit is quite small.

2. It is only a talking point. No substance. The GOP has been pushing the idea for years, but when specifically asked, Republican policy advisers admit off the record that this really is more of a talking point, and then they change the subject. There's just no there there.

3. It is already written it into the current health care law. It's already possible to sell insurance across state lines. This key plank of Trump's health care vision was authorized in 2010 by the very law he's trying to replace, and it remains in effect. The law leaves the decision up to states themselves, and since then, several states--both red and blue--have passed laws that allow insurers to sell policies in other states with similar laws. But the number of insurance companies that have taken advantage of this exciting new opportunity is exactly zero. State-by-state regulation persists. Any proposed sales must meet or exceed Obamacare's standards and can't increase the federal deficit.

4. Stripping regulations doesn't help. Perhaps what the President Trump really means by insurance competition is that he'll strip away the ACA regulations and others that allow states to regulate health insurance, making it easier for insurers to sell plans across state lines. An enterprising insurer in a lightly regulated state could create a bare-bones health plan with limited coverage and very high deductibles and co-payments. The company could offer this plan at a low premium to consumers all over the country. Sure, consumers who didn't read the fine print when they enrolled would have some unpleasant surprises when it came time to actually get health care, but that's the reality of a free market, right? All it would really do is create that "race to the bottom" of health care coverage.

5. Primary obstacle is an operational one. Networks are contracted within the state that the carrier operates. Setting up a network in every other state requires separate negotiations in those states (states will probably not give up their own oversight). This would lead to huge expenses associated within those various states - and make the entire venture unprofitable and unwieldy.

************************************

So, there you have it. Even if President Trump thinks this an answer (and obviously, he has not researched the issue), he will find few allies willing to go to the mat on something like this.

Health care is pretty complicated, Mr. President. Tread carefully.
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