Insurers not interested in selling ObamaCare across state lines


Donald Trump had one response when asked about how he would replace ObamaCare at this week’s presidential debate: He’ll allow companies to sell insurance across state lines.

The GOP’s decade-old talking point has gained momentum since the healthcare law passed six years ago. But Republicans rarely — if ever — acknowledge that the crux of what they want is already allowed under ObamaCare.

{mosads}For the last 10 months, states have been legally allowed to let insurers sell plans outside their borders.

Despite the idea’s enduring popularity, no states have signaled interest in the policy, insurance experts and regulators say. And the federal government never even finished writing the rules for how it would work.

“Insurers aren’t interested at this point,” Linda Blumberg, a senior fellow on health policy at the Urban Institute, said in an interview. “It’s kind of a lot of effort for no necessary return.”

ObamaCare’s little-known provision that allows insurers to sell plans across state lines was tucked inside the 1,000-page law at the time of its passage, though it didn’t go into effect until January 2016.

Under the law, two or more states can band together into what’s called a “healthcare choice compact.” That means people can buy health coverage from another state that wouldn’t be subjected to the rules of their home state, as long as those states agree.

States would have to explicitly pass legislation to empower insurers to enter into these agreements.

Thirteen states have tried to pass these laws since ObamaCare was signed in 2010, in part because of a push by the powerful conservative group American Legislative Exchange Council.

Only three states have approved those laws — Kentucky, Georgia and Maine — although none have actually made deals with other states to sell their plans, according to the National Conference of State Legislatures.

Conservatives say the provision that’s already in the law is far from what Republicans have in mind when they’re touting the idea on the campaign trail.

“It’s like a fake-out, and it’s not even a very convincing fake-out,” said Tom Miller, a health policy expert at the conservative American Enterprise Institute.   

Insurance companies in these special agreements under ObamaCare would still have to follow the law’s minimum standards, which requires all health plans to cover certain types of providers and services in each network. The biggest change is that companies could skirt rules that are stricter than ObamaCare’s.

“All that’s saying is, you get to do something different as long as you do the same thing you’re doing before,” Miller added.

In the GOP’s ideal world, companies would be selling insurance across state lines without the mandatory coverage requirements of ObamaCare.

Candidates like Trump have vowed to entirely repeal the healthcare law. States would again set their own regulations, leaving GOP-controlled statehouses to set low regulatory bars with hopes of driving down the costs of health plans.

“We have to get rid of the lines around the state, artificial lines, where we stop insurance companies from coming in and competing,” Trump said at Sunday’s debate, condemning what he described as insurance “monopolies” in states. “We want competition.”

But healthcare experts have long been skeptical about the plan, because they say there’s been no evidence that it would actually spur competition among insurers.

In the two years before ObamaCare, 14 states tried to pass bills that would make it legal to sell multi-state plans. But no insurer ever tried to sell their plans out-of-state.

Rhode Island was the first to approve legislation on the issue back in 2008. It allowed for the start of a New England-based health insurance market and called for a study into bringing out-of-state insurers into Rhode Island without additional licensing.

That study was never completed, and any hopes for the idea have since faded, according to Rhode Island Health Insurance Commissioner Dr. Kathleen Hittner.

“We personally, at this time, do not believe this is a good idea,” Hittner said in an interview.

She said the idea was floated recently as a way to entice a specific insurer into the state marketplace, but it was “fought vigorously” by existing Rhode Island insurers.

The biggest problem with the idea is a practical one, Hitter said.

Any insurer entering a new marketplace has to sign contracts with providers and hospitals in that state to offer those services. It’s difficult work already but far tougher when a company doesn’t have a footprint in that state.  

“Creating the network is not such a simple thing,” she said. “You have to really worry about network adequacy.”

Insurance experts say there’s still a lot unknown about the ObamaCare provision on cross-state plans.

Few details were included in the initial legislation, and the Obama administration was charged to work with the National Association of Insurance Commissioners to write the rest of the rules by 2013.

But one staff member with the group representing commissioners said this week that they were never contacted. And they don’t even support it.

“Not a single state carrier has ever asked to do this,” said the staff member, who requested anonymity because they were not authorized to speak on behalf of the group.

Without the federal government’s regulations, state insurance officials who decide to get on board with the policy would be left to figure out much of the logistics.

That’s particularly hard for insurance regulators when they’re weighed down by existing struggles with ObamaCare, such as double-digit premium hikes and insurance companies deciding to leave their states.

“It’s a talking point. But we know it’s been discussed and discussed and discussed,” the member said. “At the end of the day, it’s just not going to work.”

Tags Donald Trump National Association of State Insurance Commissioners ObamaCare

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