Health Insurance: Why Selling Health Insurance Across State Lines is Not the Answer

There's been much made of John McCain's health plan of late, the lynch pin of which is the selling of health insurance products across state lines-- something that many Republicans have been advocating for along time.  Here, in the words of Len Nichols, who will be speaking at the upcoming meeting of the interim Health and Human Services Committee meeting in Santa Fe on Friday morning, is why it won't work. 

        --- Dede

Across State Lines Explained: Why Selling Health Insurance Across State Lines is Not the Answer - October 8, 2008

 

Selling health insurance across state lines would not work as advertised and would make it harder and more expensive for many Americans to access health coverage, according to a new report released today by the New America Foundation.

The New America report, entitled, "Across State Lines Explained: Why Selling Health Insurance Across State Lines is Not the Answer," found that under across state lines proposals premiums would increase for many people, health insurance benefits would become less generous, and more Americans would likely become uninsured over time.

"Selling health insurance across state lines would have a devastating impact on the health insurance marketplace and will not work for many Americans.  This approach fails to introduce the incentives necessary to move insurers to a 21st Century business model that prioritizes care coordination and high value care over marketing and underwriting," said Len M. Nichols, Director of the Health Policy Program at the New America Foundation and coauthor of the report. "In fact, selling health insurance across state lines represents a step backwards not only for the health insurance marketplace, but also and more importantly for the American people who struggle everyday to secure quality, affordable coverage," Nichols continued.

Proposals put forth by several Members of Congress and Republican presidential nominee Senator John McCain, include provisions that would allow Americans to buy and insurers to sell health insurance across state lines.

Across State Lines Explained: Why Selling Health Insurance Across State Lines is Not the Answer

What does it mean to allow insurers to sell coverage "across state lines?"
Insurers could sell their products to Americans in any state. The insurer would have to follow the rules and regulations in the state where it is based or "domiciled" - not the rules of the state where the consumer or policyholder lives.  Allowing the state laws chosen by the insurer rather than the laws of the state where the consumer lives to govern health insurance regulation is what makes this policy so controversial.

How would selling insurance across state lines impact the following?

Premiums? Health insurance premiums may decrease for many young, healthy individuals.  Yet, premiums would like go up for many other Americans, especially those people with health conditions or individuals who prefer comprehensive insurance policies.

Benefit Mandates? Most benefit mandates would be eliminated by an across state lines proposal.  In fact, selling health insurance across state lines would eliminate any guarantee that important benefit mandates like maternity care would be included in insurance packages in the future.  Consumers would get little in exchange - overwhelming evidence shows that benefit mandates per se are not why health insurance costs so much.

Access to Coverage? Many people would find it more difficult to access health insurance if health insurance were sold across state lines.  This is because there would be fewer guaranteed issue policies and because insurers would have an increased incentive to deny people coverage and charge people more based on their health history.

How would eliminating the tax preference impact the effects of across state lines?
Eliminating the employer tax exclusion would exacerbate the consequences of an across state lines marketplace.  Fewer employers would offer coverage and millions of Americans would have to find coverage in the virtually unregulated individual insurance market.  Individuals transitioning from the employer-sponsored system to the new market would face higher premiums based on their health history and insurance policies that lack many benefits regularly covered by employer-sponsored insurance.
Would high risk pools mitigate the consequences of selling insurance across state lines?
High risk pools that are not exceptionally well funded do not make an across state lines health insurance marketplace work for all Americans.  This is because across state lines proposals encourage insurers to underwrite aggressively, which would lead to millions of people being denied coverage and facing higher premiums based on their health history.

How do you make an across state lines market work for all Americans?
A modified across state lines proposal could benefit all Americans in the context of
1) guaranteed issue and low-income premium subsidies or sufficiently funded high risk pools, and
2) federal licensure and regulation of insurers.

For more information visit our blog at www.newhealthdialogue.org or contact Elizabeth Carpenter at carpenter@newamerica.net. A summary of the report is also available http://www.newamerica.net/files/In%20Brief%20ASL%20Explained.pdf

Comments

[Health Insurance Provider]

You got a great command over health insurance matter, nice one!!

[Finance Entry]

Weakness of Balance Transfer Credit Cards

Balance transfer credit cards allow you to transfer the balances from your other cards onto your new card. The 0% introductory APR is great because it allows you some time to pay off these debts without being charged interest, but if you’re not careful, you may find yourself paying more than you thought. Offers often charge 0% on transfers but may charge a very high interest rate on any new purchases. In addition, they may not be able to be paid off until your transferred balances are paid in full. This can equate to you paying a lot in interest charges on these new purchases.

[Dino in abq]

Upon reviewing the two presidential candidates health insurance policies I found that I tend to side more with the Obama/Biden campaign. They are calling for reform of the insurance market and will allow the importation of safe drugs from other countries. Pharmaceutical companies are partly to blame for the rising cost of health insurance in this country. You can no longer turn on the television without seeing some drug being advertised. “The NIHCM study revealed that the top 50 most advertised prescription drugs accounted for almost half of the $20.8 billion increase in prescription drug spending last year” (bnet). Obama’s plan also calls for a small business tax credit which would help smaller employers provide insurance to its employees.
I do agree with John McCain’s plan that would allow for the purchase of health insurance across state lines. I tend to disagree that families should have to find insurance for themselves. I think it would make more sense for companies who are providing insurance to be able to have a broader selection to choose from, drive the prices down.
I do not agree with the tax credit for health care that McCain/Palin are promoting.
The average annual premium according to the Henry J. Kaiser Family Foundation is for “single coverage in 2008 is $4,704 and the average annual premium for family coverage is $12,680. These amounts are each about 5% higher than the premium amounts reported in 2007.” I do not think that the National Health System in Britain is the answer to our problems. It is a novel idea for every citizen to be covered by insurance, but Britain’s citizens pay much higher taxes than Americans (PBS). Do we want to pay more taxes? Also the wait for treatment is often delayed. If I have something that needs treatment, I do not want to be put at the bottom of the list. Japan has its own system of universal health care and its residents are the healthiest in the world. Japan’s system does not have “gatekeepers” like Britain’s system. Japan allows you to see any provider, but the government does set a fee for every service provided to a patient. By the government regulation of these fees many hospitals are in a deficit. We have one of the best health care systems in the world and it is clear that something has to be done to fix the rising cost of health care. We should take what has worked in other countries and pick and choose to make our own policy for America.

[ConcernedinNewMexico]

I do not agree with McCain's policy, of Americans being able to purchase health insurance across state lines is the best option. I like the U.K.'s health care system; no premiums, no bills and everyone born in the U.K. is covered. Although, the extended waiting lists to see specialized doctors is not something "spoiled" Americans would prefer, we need to outweigh the costs of health care to waiting lists. Too often with PPOs, HMOs and community hospitals that is already the case. I would rather have the government take care of the health costs rather than my checkbook. Obama is very liberal for me, but I do agree with Obama/Biden policies for Health Care "working for the people, and not for the business". I like standardized pricing, like Japan has; we should recognize Japan's example. Japan has small premiums and a country standardized costs, MRIs are only around $90 and overnight hospital stays $10. There are some drawbacks, the hospitals are in great deficts, but can be managed with slight costs increased; the people are not in a deficit, though. Something is very wrong with our country when average-income families are going bankrupt due to costly medical bills. We need to voice our concerns and make our government work for us. We are the people, our voice needs to be heard. First, we as the people must become more educated on policies and know our rights. We often vote ignorantly, and leave it up to those we vote into office to be super-humans and fix everything. We all must take blame and credit where it is deserved. Our Health Care System is definitely something that is going to take great thought and org1anization, by our reprensentatives serving the people and not the corporations.tt