Selling Health Insurance Across State Lines: An Assessment of State Laws and Implications for Improving Choice and Affordability of Coverage
Robert Wood Johnson Foundation Rapid Response Paper
14 Pages Posted: 11 Oct 2012
Date Written: October 1, 2012
Proposals to authorize the sale of private health insurance “across state lines” are often promoted to address the challenges of high health insurance costs and a lack of choice among insurers and have been a core component of alternative health reform proposals since the mid-2000s. Critics, however, argue that across state lines proposals would lead to deregulation and a “race to the bottom” where health insurers relocate to the states with the least burdensome regulations. Despite the often forceful arguments for and against across state lines proposals, there has been little opportunity to assess how they work in practice. To understand the impact of across state lines proposals on the availability of health insurance and the competitiveness of state health insurance markets, we analyzed legislation that has been enacted in six states — Georgia, Kentucky, Maine, Rhode Island, Washington and Wyoming — to require, encourage or study the feasibility of allowing the sale of health insurance across state lines or the formation of interstate health insurance compacts. To gain a more in-depth understanding of the laws’ impact, we also reviewed related materials such as regulations, studies and reports and conducted interviews with government officials and insurers.
We find that while across state lines proposals cite many important goals — such as enhancing consumer choice, increasing competition and making insurance more affordable — the across state lines proposals as currently enacted in six states do not address the true drivers of health insurance costs nor do they adequately take into account the complexity of how insurance products are sold and regulated. The proposals also underestimate the administrative hurdles necessary for full implementation. As a result, none of the across state lines laws resulted in a single insurer entering a new market or the sale of a single new insurance product.
Keywords: across state lines, health insurance
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