It sounds like a great idea. More competition leads to lower prices. It’s the free market in action, right?

President Trump is onboard with it.

Don't worry, getting rid of state lines, which will promote competition, will be in phase 2 & 3 of healthcare rollout. @foxandfriends

— Donald J. Trump (@realDonaldTrump) March 7, 2017

He called for cross-state insurance in his address to a joint session of Congress last month.

It seems to be an article of faith among Republicans in Congress, too. A stalwart conservative like Sen. Ted Cruz thinks it’s a good idea:

“First, we should allow consumers to purchase insurance across state lines. This would create a true 50-state marketplace, driving down costs for everyone. If California wants to mandate that every California insurance company must offer only top-of-the-line comprehensive coverage—driving up premium costs by thousands of dollars—then California consumers should also be able to buy insurance licensed in other states, without the mandates.”

No, no, no! Purchasing a health care policy is not the same as purchasing airline tickets or downloading a movie from iTunes.

Let people who study and actually deal with health insurance explain why this is not a good idea.

Barbara Klever of the American Academy of Actuaries notes that, “Premiums really reflect the cost of care where an individual lives.”

Economist Joe Antos of the American Enterprise Institute says you can’t compare getting, say, a better credit card rate across state lines to health care, either. He says it’s a “faulty analogy.” Competition needs to happen between doctors and hospitals, not insurers: “The most expensive part of health care is hospitalization, and that is pretty much going to drive the price of insurance,” Antos says.

My friend Beverly Kastl Gossage has sold health savings accounts in Kansas for over twenty years, and is certified in over twenty states. She is an active member of an Affordable Care Act repeal coalition, and has traveled repeatedly to Washington DC, meeting with members of Congress to encourage consumer-driven health insurance reforms. She is adamantly opposed to purchasing health insurance across state lines:

“Here’s why insurance is different than any other product. If you were to go to an auto insurance carrier’s site and get a quote, what is the first thing they ask? Your zip code. Why? Because the rates are based on the area where you live and will likely get your car replaced and the regulations in your state.
With health insurance the rate is based on your zip code because the carrier decides which states where it wants to write business. It prices the plan based on an actuarial table of of it’s negotiated rates with providers in your zip code. I can take the exact same plan and change the zip in KS and the rate will be very different. In fact carriers may even offer different plans in Wichita than it does in Kansas City. So zip code where you live matters.
Since KS has consistently had the lowest rates, people in NY with the highest rates may want to buy a product from here. But that won’t work because all of their doctors are out of network and the carrier never agreed to offer plans in NY and it would take a great deal of work to determine how to price that person. You can imagine their rate would be far more than the person in KS.”

She continues:

Any carriers can sell insurance in any state. If a state wants more carriers, they can remove some of the regulations that are discouraging carriers to sell in your state. NY and MA had the ACA type regulations before the ACA was passed. That is you must accept everyone and charge everyone the same. Many carriers couldn’t compete in that regulatory environment.
Now KS and MO had 17 and 24 carriers, respectively. Lots of competition because they had fewer regulations. Any state can reduce their regulations to encourage more competition. And they should. In KS we passed the mandate lite bill that allowed carriers to write any plans that they thought people might like. It was moot due to the ACA, but with repeal will be activated. As long as the carrier tells you which state mandates they don’t cover, they don’t have to include them as some people don’t want them in their policy. . . .

The carriers do enormous research before selling a product in an area and create rate tables for that area. Humana writes policies in nearly every state. Any carrier could do that. Those policies must be filed with each state to abide by the state’s regulations and the premiums are determined by their agreements with the doctors in that area and are based on the population who would likely buy their plans. They then establish a rate sheet for each product offering and determine in which zip code that product is offered.
The consumer doesn’t realize this when he enters his zip code and looks at rates and plans. But if he entered a zip code in another state, the plan wouldn’t work for him.

Furthermore, don’t conservatives want the government out of our health care choices? Isn’t that one of the main reasons to repeal Obamacare? Then why would we want to have the government sticking its nose into cross-state health insurance under sanctions of regulating interstate commerce?

Yes, purchasing health insurance across state lines may sound like a great idea, but it’s not. Return health insurance to the states where the free market can truly thrive.