With the help of a Republican-controlled Congress, President-elect Donald Trump wants to move forward with his plan for cross-state insurance sales. To maximize choice and create “a dynamic market” for health insurance, Trump’s administration plans to work with Congress to enable people to purchase insurance across state lines, according to the President-elect’s policy website.
However, John Greene, vice president of congressional affairs at the National Association of Health Underwriters, does not see the effort getting very far. “Selling across state lines won’t work,” he says. “If the carriers could do that and it would work they would have already done it.”
Linda Blumberg, senior fellow on health policy at the Urban Institute, says insurers are not interested at this point to sell across state borders. “It’s kind of a lot of effort for no necessary return,” Blumberg says.
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Julie Rovner, contributor for Kaiser Health News, says because of specific networks of doctors and hospitals, selling a policy to someone in another state may not match to the networks offered in the policy’s home state. “If you are in Florida and you want to buy a plan for North Dakota, it is unlikely that North Dakota will have many options for you in the Sunshine State,” Rovner says.
Existing law
Since 1945, insurance firms in each state have been protected from interstate competition by the federal McCarran-Ferguson Act, which grants states the right to regulate health plans within their borders.
Over the past eight years, a growing number of state legislators have become interested in whether some states allow or facilitate the purchase of health insurance across state boundaries or from out-of-state regulated companies.
As the Affordable Care Act stands now, states can sell health insurance across state borders by joining in an inter-state compact, which allows insurers to sell coverage among the states that participate in the compact.
Under section 1333 of the ACA, two or more states may enter into compacts under which insurance plans may be offered in all the participating states, subject to the law and regulations of the state in which they were written.
State health insurance research and tracking by the National Conference of State Legislatures shows at least 21 states, as of fall 2016, are considering this idea. Of those 21 states, five of them have signed state laws allowing the buying and selling of health insurance across state lines:
- Rhode Island
- Wyoming
- Georgia
- Kentucky
- Maine
Proponents for expansive cross-state selling say cost could be reduced by buying coverage that does not require the coverage of more expensive treatments such as autism or fertility, but because of the ACA, many states have already become uniformed in the way they sell coverage, Rovner adds.
Katy Spangler, senior vice president of health policy at The American Benefits Council, says opponents to cross-state selling say having the option to buy and sell health insurance across state lines could cause insurance companies to move to more affordable locations, leaving behind poorer quality health insurance options.
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“Most insurance companies could decide that they want to pick a state with the least amount of benefit mandates and operate out of that base,” Spangler says. “Consumer advocates would say that coverage is not as good.”
Resolution needed
Spangler added that Trump’s plan to allow cross-state selling across the country may only succeed if Congress proposes a budget resolution that would include a reconciliation instruction, which would then determine whether cross-state selling would be included in the bill.
“The question would then be if the reconciliation bill would violate the Senate Byrd rule, which stipulates that any legislation included in a reconciliation bill has to impact the budget,” Spangler says. “I don’t know what the parliamentarians would be able to say if allowing insurance to be sold across state lines would impact the budget.”
Joel Wood, lobbyist for the Council of Insurance Agents & Brokers, says one aspect of the ACA that has never been utilized was a provision that would allow Health & Human Services to essentially negotiate one or two national plans that would be bare bones in nature.
“That would escape all minimal essential benefits guaranteed that are in the state,” Wood says. “They always failed to do that and people might want to choose a plan that is more affordable for them that does not contain fertility benefits, for example, or chiropractic services.”
Wood adds that there are a lot of tricky barriers that will need to be overcome before cross-state selling become more appealing to insurance brokers, such as consumers who receive their insurance through private exchanges.
“I expect to see a transition to high risk pools, I expect to see devolution away from Washington and toward the states, but with preemptive utilization of provisions, that ironically has been in the Affordable Care Act but has not been utilized, to let HHS negotiate those options,” Wood says. “How is that going to fit into any kind of an exchange-type construct or to what extent are the subsides going to continue to be extended, all of these are unknown.”
