News & Commentary

Selling Insurance Across State Lines Puts Georgia on the Minds of Experts

Not a one. There have been no takers in one of the states—Georgia—that invites insurers from other states in to sell their products. Republicans, including Rep. Tom Price, President-elect Donald Trump’s pick to head HHS, have long argued that allowing insurers to sell across states lines will increase competition and lower costs.

Georgia has allowed interstate sale of health insurance for five years. As Kaiser Health News reports, the law was seen as a way to offer cheaper health insurance by selling policies that don’t follow Georgia’s required benefit coverage, such as prostate, cervical, colorectal, and breast cancer screenings.

Some state insurance regulators are skeptical, as well. Louisiana Insurance Commissioner Jim Donelon, told the Wall Street Journal: “That sounds like a silver bullet to solve a major problem, and there are no silver bullets. There are no simple answers.”

Graham Thompson is the executive director of the Georgia Association of Health Plans and sees the idea as a positive change, but with caveats. He told Kaiser Health News that “all health care is local—all health care costs are local.”

New entrants to a state will be starting out cold. Paul Markovich, the CEO of Blue Shield of California, told the WSJ: “In order to offer more value, you will need to have relationships and contracts with the providers in a state.”

“It’s the network, stupid,” Sabrina Corlette, a research professor at the Center on Health Insurance Reforms at Georgetown University’s Health Policy Institute, told Managed Care in June. Building a network from scratch is “very difficult and extremely expensive,” she says. “It requires not only a lot of man hours to go sign up all these doctors and hospitals, but when you’re a brand new carrier with no enrollment, how do you convince a provider to not only sign up with you but to also give you any kind of discount? You have no clout. You have no ability to negotiate a decent rate. If you can’t get a decent rate from your providers, how do you offer a competitively priced premium?”

And there’s been a shift in power over the last decade. Providers now have the upper hand for the most part.

Georgia is not the only state inviting out-of-state insurers in. Maine and Wyoming have passed such laws. Rhode Island’s 2008 statute limits out-of-state policies to neighboring Massachusetts and Connecticut, so some proponents of out-of-state policies think that that’s really not going to make a broader market. Kentucky’s law is limited to a feasibility study of allowing states to join forces and create a regional market for health insurance.

Corlette, who coauthored a 2012 report on selling health insurance across state lines, told Managed Care: “There’s been a lot of moving and shaking, but I would be absolutely shocked if I heard from an insurance company that one of these state laws was the reason they came into the commercial market.”

John R. Graham, a senior fellow at the National Center for Policy Analysis, a Dallas think tank that argues for market-based approaches to public policy issues, called the idea a red herring. Prices set by the provider network associated with a health plan are the biggest determinant of insurance rates, not the familiar punching bag of state-level mandates, Graham believes. People in New York might get a better rate from an insurer in Utah, but only if they are prepared to hop on a plane and get their medical care in Salt Lake City, he wrote.


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