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Selling Health Insurance Across State Lines Is a Swing and a Miss

Selling Health Insurance Across State Lines Is a Swing and a MissSeptember 1st, 2015 – Politicians are trying to solve America’s health care mess in a variety of ways. However, simple solutions rarely solve complex problems and, in fact, typically create fresh new problems.

A few presidential candidates have proposed that allowing health insurance companies to sell health insurance across state lines would help control rising health insurance costs.  At first glance, this seems perfectly logical, but the reality is that it would lead to even more consolidation of insurance carriers and leave consumers with fewer choices.

Merrill Matthews, who focuses on free-market solutions to policy problems, said “I’ve tried for 10 years to explain this to Republicans; it is a big problem. Just because a good affordable policy is available in another state doesn’t mean that I would be able to get the network of physicians and the good prices that are available in that other state.”

States with younger and healthier residents like Colorado, Utah and Texas tend to have lower costs than other states, so Colorado residents would be unlikely to see any benefit from such a change.

Many of the more affordable insurance companies in Colorado like Colorado HealthOP and Kaiser, have regional provider networks that are limited to Colorado, so there would be no benefit to consumers from out of state to purchase such a plan.  While regional carriers could expand their networks to out of state, there’s also a financial cost and underwriting risk associated with that which would likely be borne by existing clients.

If regional carriers are forced to compete with the tiny number of truly national insurance companies, most would go out of business or, if they’re lucky, get acquired by a larger company – all resulting in reduced competition for consumers.

The most viable solution to America’s healthcare mess should be a free market solution that embraces standardized and transparent pricing of provider services along with the elimination of insurance company provider networks which limit access to providers and mask the true costs of services.  These changes, along with increased tax incentives for consumers to purchase insurers’ consumer driven health insurance plans will empower consumers to make smart healthcare purchasing decisions and force providers to compete for customers based on price and quality.  These economic pressures can actually reduce healthcare costs.




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