Parties clash over selling insurance across state lines

Basic consumer protections that exist in almost every state would be eroded if insurance companies could sell policies across state lines, Democrats said Wednesday.

Rep. Henry Waxman (D-Calif.) said some coverage mandates, such as a requirement to cover adopted children and disabled adult children, are on the books in more than 40 states. A Republican bill to ease the interstate sale of insurance would take away many of those protections, he said.

Democrats have often characterized interstate insurance as a “race to the bottom.” One state could largely deregulate its insurance market. Insurers could then base most of their policies there and sell them in other states without adhering to those states’ laws, critics of the idea say.

Republicans, though, said during a House Energy and Commerce health subcommittee hearing that selling insurance across state lines would give consumers more choices and allow people to buy bare-bones policies if they can’t afford more comprehensive coverage.

Steve Larsen, the director of the Health and Human Services Department office that is leading the implementation of healthcare reform, disagreed. He said that kind of flexibility would allow lightly regulated states to peel away the young, healthy customers from neighboring states. Their prices would then rise.

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