NCPA - National Center for Policy Analysis

Blue-Sky Thinking on Health Reform: An Interstate Compact for Health Insurance

December 27, 2010

One of the goals of effective health reform is health insurance that is owned by the individual and portable from job to job and state to state.  Facing decades of congressional failure to allow such insurance, it is time for states to seize the initiative and begin discussing an interstate compact for health insurance, says John R. Graham, director of health care studies at the Pacific Research Institute.

But an effective interstate compact for health insurance faces a couple of obstacles.

  • First, while there are examples of compacts passed without explicit congressional approval, none is established deliberately to provoke a hostile response from the federal government -- such would be the outcome of an interstate compact attempted while ObamaCare is still the law of the land.
  • A second obstacle could arise from the complexity of building a new compact for a single line of insurance from scratch.

This second obstacle might be overcome by adding health insurance to the interstate compact that already exists for other lines of insurance: The Interstate Insurance Product Regulation Commission (IIPRC).

The advantages of enlarging this compact to include health insurance are easily enumerated.

  • First, it exists -- the IIPRC enjoys solidly written legislative language and committees for audit, finance, product standards, rulemaking and other critical responsibilities for a successful compact.
  • Second, state legislators and other interested parties can quickly educate themselves by contacting officials employed by the compact who can assist and advise.
  • Third, to the degree that the IIPRC would be unable to enlarge itself to accommodate health insurance, this would serve further to expose the absurdity of federal laws governing health insurance.

Enlarging the compact would demonstrate that states are ready, willing and able to regulate individually owned and portable health insurance.  Rather than wasting scarce legislative time trying to find the least harmful way of "implementing" ObamaCare, state politicians should invest in reforms that will survive long after ObamaCare is relegated to history's dustbin, says Graham.

Source: John R. Graham, "Blue-Sky Thinking on Health Reform: An Interstate Compact for Health Insurance," Pacific Research Institute, December 14, 2010.


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