NCPA - National Center for Policy Analysis


December 12, 2007

The Health Care Choice Act would allow residents in one state to buy health insurance that is available in and regulated by another state.  If enacted, the law would create a competitive, 50-state market for health insurance, likely making it cheaper, says Merrill Mathews, executive director of the Council for Affordable Health Insurance.

Because regulations vary from state to state, the cost of health insurance varies widely. One of the most expensive state-level regulations is "guaranteed issue," which requires insurers to sell insurance to anyone willing to buy it:

  • New Jersey, for example, enacted guaranteed issue in 1994; at the time, a family policy could be purchased in the state for as little as $463 a month or as much as $1,076, depending on which of the 14 participating insurers a family chose.
  • Now there are just 10 insurance companies offering plans in the state and the cost has soared to $1,726 per month on the low end and $14,062 on the high end.
  • In New Jersey then, residents who buy their own insurance have to pay at least $20,000 a year for the cheapest family policy.

Meanwhile, in neighboring Pennsylvania similar health-insurance policies cost a third of what they cost in New Jersey; what the bill would do is let New Jersey residents buy what's now for sale in Pennsylvania, says Mathews.

If states are worried about losing regulatory control over health insurance, they might try making their regulations competitive with other states, says Mathews.  Health insurers would likely respond by returning and offering a wide range of affordable policies. As it stands, many states are "protecting" their residents right into the uninsured camp.  The Health Care Choice Act won't solve every problem, but it would increase competition and consumer choices currently denied to residents in many states.

Source: Merrill Mathews, "Health-Insurance Solution," Wall Street Journal, December 12, 2007.

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