NCPA - National Center for Policy Analysis

Health Insurance Reform's Red Herring

October 6, 2015

Here we go again, Republican politicians are rolling out an easily digested sound bite: Allowing health insurers to sell coverage across state lines would solve the problem of high premiums. It has been a feature of Congressional Republican proposals since at least 2010, says senior fellow John R. Graham of the National Center for Policy Analysis.

The only problem is that such a reform has no effect. Back in 2010, Georgia sacrificed its sovereignty to regulate health insurance, but premiums didn't change. The reason is that if a health plan wants to offer coverage in a state, it already can easily do so. Health insurers enter and exit markets all the time. Aetna and Cigna are domiciled in Connecticut, but that does not prevent them from offering plans in other states.  Insurance commissioners do not discriminate between in-state and out-of-state insurers when they issue insurance licenses.

Whether or not Congress has the authority to pre-empt states' powers to regulate insurance within their borders is a question I will leave for constitutional scholars to debate. Whatever the answer, it does not change the fact that "selling health insurance across state lines" is a red herring.

This brings us to a legitimate recommendation for Congress: Stop the tax code's discrimination against individually owned health insurance. The bias in the tax code forces us to get the health benefits that our employers choose, rather than letting us use our own pre-tax dollars to buy individual, portable, guaranteed renewable, health policies of our own choosing.

Until they embrace the principle that every American should be free to choose his own health plan, and not have to rely on one chosen by his employer, the Republicans will continue to stumble on the path of real health reform.

Source: John R. Graham, "Health insurance across state lines," The Hill, October 1, 2015.

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