Interstate Health Insurance Has Five-Year Tryout in Georgia—But No Takers

GOP champions out-of-state policies in health care reform

Among Republican ideas to transform the U.S. health care system is a proposal to allow health insurers to sell their policies across state lines. President-elect Donald Trump and other advocates see it as a way to boost competition. The interstate sales idea is part of a general GOP blueprint to replace the Patient Protection and Affordable Care Act (PPACA). But in Georgia, the interstate sale of health insurance has already had a five-year tryout, with disappointing results, according to a report from Kaiser Health News.

In 2011, the state legislature passed a bill allowing insurers sell any policies in Georgia that they offer in other states. The legislation was hailed by supporters and business groups as a way to skirt the state’s required benefit coverages—such as screenings for cervical, prostate, and colorectal cancer, along with mammograms—and thus lower the sticker price of insurance.

The law is still in effect. But since it was passed, no health insurer has taken advantage of it, Kaiser says.

And since January 2016, an obscure provision of the PPACA has been in effect, letting individual states agree among themselves to allow sales by one another’s health insurance companies. Although several states have passed laws to move toward such a compact, none has made any deals to sell across state lines.

Graham Thompson, executive director of the Georgia Association of Health Plans, said that that one obstacle to insurers selling out-of-state policies in Georgia is that “all health care is local—and all health care costs are local.” So insurers would still have to strike contracts with local hospitals and other medical providers, he noted.

Last week, state insurance regulators told the Wall Street Journal that in states that require locally licensed insurers to offer extensive coverage, healthy people might abandon those companies to buy bare-bones policies from out of state. That, in turn, would leave local plans insuring mostly people with health problems, who need broader, more-expensive coverage. As the locally registered insurance companies absorb the financial hit, the state might feel pressure to relax standards to give them a break.

Sources: Kaiser Health News; December 8, 2016; and Wall Street Journal; December 3, 2016.