NCPA - National Center for Policy Analysis


September 9, 2008

Differing regulations and mandates among the states cause wide variations in individual health insurance rates.  The federal McCarran-Ferguson Act, which lets states set their own requirements for coverage, has protected state markets from competition, and led to an assortment of mandates -- many of which the insured do not want or need, say Devon Herrick, a senior fellow, and Ariel House, a junior fellow with the National Center for Policy Analysis.

For example:

  • About one-fourth of states require health insurance to cover acupuncture and marriage counseling.
  • More than half of states require coverage for social workers and 60 percent mandate coverage for contraceptives.
  • Seven states require coverage for hairpieces and nine for hearing aids.

In all, there are more than 1,900 state mandates across the United States.  Some legislators contribute to this excess by giving in to special interest demands that insurers cover their specific services and providers.  The result is higher premiums for consumers -- pricing an estimated one-fourth of the uninsured out of the market, say Herrick and House.  

Rep. John Shadegg (R-Ariz.) has proposed interstate competition at the federal level with the Health Care Choice Act (H.R. 4460):

  • The bill would allow consumers to shop for individual insurance on the Internet, over the telephone or through a local agent.
  • Residents of any state would be free to choose among policies from insurers in any state.
  • The policies would be regulated by the insurer's home state.
  • If consumers do not want expensive health plans that pay for benefits they do not need -- such as acupuncture, fertility treatments or hairpieces -- they could buy from insurers in states that do not mandate such benefits.

With interstate competition, consumers would be more likely to find a policy that fits their budget, giving more people access to affordable insurance, say Herrick and House. 

Source: Devon Herrick and Ariel House, "How to Make Health Insurance Affordable: 2008," National Center for Policy Analysis, Brief Analysis No. 630, September 2008.

For text:


Browse more articles on Health Issues