Obamacare Repeal: Say No to Purchasing Insurance Across State Lines. Here’s Why. [VIDEO]

Obamacare Repeal: Say No to Purchasing Insurance Across State Lines. Here’s Why. [VIDEO]

Obamacare Repeal: Say No to Purchasing Insurance Across State Lines. Here’s Why. [VIDEO]

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.

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.

Written by

Kim is a pint-sized patriot who packs some big contradictions. She is a Baby Boomer who never became a hippie, an active Republican who first registered as a Democrat (okay, it was to help a sorority sister's father in his run for sheriff), and a devout Lutheran who practices yoga. Growing up in small-town Indiana, now living in the Kansas City metro, Kim is a conservative Midwestern gal whose heart is also in the Seattle area, where her eldest daughter, son-in-law, and grandson live. Kim is a working speech pathologist who left school system employment behind to subcontract to an agency, and has never looked back. She describes her conservatism as falling in the mold of Russell Kirk's Ten Conservative Principles. Don't know what they are? Google them!

18 Comments
  • parker says:

    I agree. Obamacare should repealed. I can write the necessary legislature: The Affordable Care Act is hereby repealed effective upon the date President Donald Trump this bill. Then leave for the states to regulate insurance. Next abolish the Department of Education

    • GWB says:

      One question for making that ‘easy’ law, though: was there any law passed after the ACA, based on the changes it made to law? Repealing ACA wouldn’t repeal those laws, and might complicate things needlessly. Not saying your idea is bad, but it does need a bit of checking to make sure we don’t make some other thing worse.

  • Larry Sheldon says:

    Yeah–you definitely ought to listen to the car thieves on why you should leave the keys in the door.

  • Joe Miller says:

    If insurance companies are not REQUIRED to sell across state lines this won’t be a problem at all. Regardless of what the repeal of Obamacare ends up being, you just know that the press will seek out the people who are most damaged by the repeal. Have you seen any interviews with people who are paying several times what they previously paid for insurance? Or people with such high deductibles that they can’t afford to use it?

    • Kim Quade says:

      Yes. I am one of those people whose premium skyrocketed after the ACA set in, and was interviewed on Fox Business a couple of months ago.

      • Joe Miller says:

        Fox Business isn’t “the press.” They’re far superior. What news I get from TV comes from Fox Business. Mornings with Maria is part of the morning routine.

  • GWB says:

    Thank you for this ‘contrarian’ view, Kim. It’s not really a conservative position to nationalize the market. But I think a lot of conservatives think it is because they also believe that “free trade” is fundamentally conservative. (It’s not, really; but free trade has a different set of risks than trade protectionism.)

    Now, *allowing* a national market might be conservative, as long as buying in-state policies is outside the purview of the national gov’t. (Rescinding the Wickard v. Filburn precedent – and others – would go a long way toward restoring the proper place of the federal gov’t in commerce.)
    The most important thing would be to repeal all national mandates to purchase any thing or service, and to cover certain services. Let people 1) negotiate with their providers directly and 2) negotiate their insurance coverage. Let me determine if I want birth control covered, or even abortion (*shudder*), or end-of-life palliative care, or even colds and flu.
    Oh, and open HSAs to all people. If medical care is deductible in federal taxes, then I should be able to put $$ in an account tax-free to be used solely for medical care. Regardless of my coverage or percentage of my income spent. Period.

    • Kim Quade says:

      Yes. Totally agree with expanding HSAs. I purchase insurance on the private market, and have had an HSA for several years. They provide control of your health care dollars, and I appreciate the freedom they provide.

      • GWB says:

        I lost my HSA last year when my new company didn’t provide (thanks partly to 0bamaCare) a high-deductible plan. We’ve asked them to provide one, but they aren’t yet (again, partly driven by 0bamaCare’s requirements).

  • trigger warning says:

    So, Ms Gossage’s argument is “we should continue doing it the way we do now because it’s the way we do it now and we do it that way because our product is special and the companies have already been forced to adapt to our rules”

    Very compelling. 😀

    • GWB says:

      No, the argument is that they can no longer offer those special products if the market is nationalized. In other words, they can’t adapt to what the customer really wants.

      And, yes, it is a compelling argument.

      • trigger warning says:

        If they have the “special products” now, they could have the “special products” based on zip codes whether the product could be sold across state lines or not.

        A state-based red line for insurance is a political scam benefiting state insurance commissioners and their rent-seeking beneficiaries in the business, just like state-based alcoholic beverage laws. And liquor and beer distributors make exactly the same vacuous argument.

        • GWB says:

          I don’t think you grasp the results of nationalizing this market (which is exactly what 0bamaCare did, btw). It doesn’t free the market, it makes it captive to an even broader set of regulations. Unless you eliminate the national oversight of this market, nationalizing it homogenizes it and reduces it to the lowest common denominator. And that benefits neither the consumer nor the providers or insurance companies.

          I guarantee you that a nationalized medical insurance (or shared-cost-medical-payment programs, in reality) will NOT allow specialization and customization to a customer’s wants and needs.

          BTW, would you prefer nationalized liquor laws? I doubt you would enjoy the results. Rent-seeking exists at all levels, and the only way to eliminate it is to eliminate the regulation, not to raise the level at which regulation is enacted.

        • GWB says:

          Also, note that national companies are providing those special policies Ms Gossage mentions. What is being argued against is the idea that I should be able to buy a policy priced for Podunk, when I live in NYC – or vice versa. When folks speak of buying “across state lines” they are really talking about restricting the market activities of the insurance companies – forcing them to sell to folks they haven’t brought into their risk pool, at the risk pool price. (Hence the argument about homogenizing the market – they will have to expand the risk pool to a meaninglessly large group.)

  • Reed says:

    While I don’t doubt Ms. Gossage’s good intentions, it’s worth noting that her Business & Income are fully intertwined with State Insurance regulations and charging people to navigate them. If they go away, where will her business come from? 2nd, she was a Candidate for Kansas Insurance Commissioner in 2014 … so she’s apparently quite interested in the office & agency for many reasons. 3rd, some of us here in KS remember that Kathleen Sebelius was our Insurance Commissioner prior to being Governor.

    • Kim Quade says:

      Prior to this calendar year, Mrs. Gossage charged no one; she received commissions from the insurance companies. The ACA forced her into charging customers, as the commissions dried up. I will add that what she charges is very minimal. She does not charge Medicare customers.
      I hope you are not casting aspersions upon her character simply because she ran for insurance commissioner. She is good friends with the current insurance commissioner and his wife. I have not heard that she wishes to challenge him. But if she does, so what?
      I have known Mrs. Gossage for many years, and will tell you without hesitation that she is of impeccable character.

  • instugator says:

    I always understood the ability to buy insurance “across state lines” was to be accomplished through the removal of state mandates.

    It is actually a proper use of “commerce clause” power.

    • GWB says:

      While I disagree with any mandates (outside fraud and contract issues), suppressing all state mandates via national un-mandates is problematic in its own way. But, you’re right, it could be a proper use of the commerce clause.

      What many people are looking for, however, with the removal of a limitation to buy within your own state, is to buy NYC policies at Podunk prices. That won’t happen if the market is freed by removing all mandates. (And that’s a good thing.) I would rather see the national overreach repealed, then a repeal of all national mandates, then let the citizens of each state hash things out.

      (BTW, have you ever flown out a little airstrip in Arkansas, near the Missouri and Tennessee borders?)

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