Selling health insurance across state lines not likely to reduce premiums

In case you haven’t heard, America, there’s an easy fix for Obamacare should Congress decide to repeal and replace it:

▪ Allow health insurance companies to sell policies across state lines.

▪ Competition drives premium prices down.

▪ Consumers buy less expensive policies and live happily ever after.

The life and budget-changing power behind this alteration has grown almost mythical in Washington, mostly among Republicans who are facing the reality that if they want to dump Obamacare, they need workable alternatives.

I’ll be the first to say Obamacare needs tweaks and wholesale changes. But first, Congress needs to get schooled in how the health insurance industry works.

A few states already allow selling health insurance across state lines, but it hasn’t brought prices down, according to a September Forbes Magazine article. Two heads of Idaho state agencies say this interstate sales wrinkle would likely not benefit anyone in Idaho because there is little if any incentive for Idahoans to buy insurance from another state when they may find themselves outside their network of care providers — and even less incentive for insurers to make the risk numbers that work in one state also work in another state.

“It would be inefficient for a company to take a contract designed for Boise and sell it in Montana. There are fewer people in Montana,” said Dean Cameron, director of the Idaho Department of Insurance. The former insurance industry official and Idaho GOP senator with a knack for numbers as Finance Committee chairman can’t imagine the across-border-sales producing the desired outcome.

If the new insurer’s network is not in Idaho, “Do I want to be forced to go out of state for my treatment?” Cameron said. “Who do I call if I bought insurance in Maine and there is a problem?”

When Idaho’s director of Health and Human Services visited with the Statesman Editorial Board in November, Dick Armstrong was asked what he thought about health insurance companies being able to operate across state lines — something President-elect Donald Trump has championed.

“It’s the silliest argument I’ve ever heard. Think about it: Insurance is regulated by the states. Is he suggesting that we’re going to federalize health insurance? It doesn’t seem like a GOP principle to me. ... Idaho health care costs are lower than in other states. Now, do you think we want to allow people from California, living in California, to buy a product based on Idaho costs when they’re not going to use the Idaho hospitals? No. ... You cannot afford to sell an Idaho rate to somebody living in New York and think that your rates are going to stay put. They won’t. They’ll migrate completely through the roof and then Idaho will look just like those other states.”

The only possible scenario Cameron could see working would involve two-state regions where health networks, hospitals and other services have proximity and could be shared. Theoretically, border areas such as Kansas City, Mo., and Kansas City, Kan., might be able to make it work.

I was first exposed to this “across state lines” idea in 2009 when those opposed to the Affordable Care Act were generating alternative plans to thwart the ACA. It’s become more myth than reality.

And then there is this question: What’s in it for Idaho, a state with a successful Your Health Idaho exchange that has the relative luxury of offering six different carriers? Many other states are down to one or two carriers.

If the goal is to reduce health care costs and the only method is to create more competition among insurers, that won’t get it done.

“Yes, we need more competition,” Cameron said. “But we need it at the provider level.”

More choices. More doctors, nurses and hospitals competing on the basis of patient outcomes.

This story was originally published January 4, 2017 at 4:55 PM with the headline "Selling health insurance across state lines not likely to reduce premiums."