Selling Health Insurance Across State Lines

Lawrence Mitchell

There is considerable discussion concerning the revision or replacement of the Affordable Care Act (ACA).

One of the revisions is to allow an insurance company to get a policy approved in any state
and then sell it in any other state without having to meet any of the requirements imposed by the other state.

The proponents assert this will lead to more competition, which will lead to lower premiums for health care services.

Although the topic entails all health insurance, this paper concentrates on the confluence of these principles as they apply to the small group and individual market, with additional focus on individual health insurance premiums. In most instances, large group plans have the ability to enroll eligible persons across state lines, as long as they are members of the group.

This paper discusses various aspects of the suggested revision and comes to the conclusions that, absent changes in the uniformity of benefit, rate and underwriting reforms required by the ACA, cross state selling in and of itself:

  1. Will produce no change in health care costs, and
  2. Could result in less competition.