NCPA - National Center for Policy Analysis

How Would Selling Insurance across State Lines Work?

October 10, 2014

For years, a number of health policy reformers have encouraged lawmakers to allow health insurance to be sold across state lines. Brittany La Couture of the American Action Forum explains how such a regime would work.

Americans are unable to purchase insurance sold in another state. Each state has control over the insurance market within its borders, and regulations vary. La Couture explains the upsides of allowing the interstate sale of insurance:

  • Health consumers would have far more options available to them, allowing them to pick a plan that best suits them and their families. Because some states mandate certain benefits, insurance plans in those state are far higher than in others, and many consumers may have no need for such benefits.
  • Allowing such sales would increase competition, forcing insurance providers to provide a better product at a better price, forcing premiums down.
  • Employers would also have more options, which would make it easier for small employers to provide health insurance and compete with other companies.
  • Heavily populated areas or border cities could see a 22 percent to 49 percent increase in health coverage if the insurance market were opened up.

Those opposed to the interstate sale of insurance fear states would peel back laws mandating benefit coverage in order to increase market share. Such a move, they say, could push all of the patients who do need those mandatory benefits (drug rehabilitation, for example) to another market, raising prices.

La Couture concludes the benefits of interstate health insurance sales could be significant, urging lawmakers to focus on giving consumers greater choice.

Source: Brittany La Couture, "Primer: Interstate Sale of Health Insurance," American Action Forum, October 7, 2014.


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