Paul Sanchez
The concept of selling insurance across state lines is not new, and it has been a topic of debate for several years. Proponents of cross-state insurance sales argue that it would lower costs and increase competition, while critics argue that it could lead to a race to the bottom with insurers relocating to states with the most favourable regulatory environments. The current law requires individuals to purchase health insurance in the state where they have their permanent address. However, some states have started to allow cross-state sales, and it remains a topic of discussion in health reform proposals.
Are you allowed to cross state lines for medical insurance?
| Characteristics | Values |
|---|---|
| Current Law | You must buy health insurance in the state in which you have your permanent address. |
| History of State Regulation | Prior to the 2010 enactment of the Affordable Care Act (ACA), state insurance regulations varied widely. States differed in the extent of medical underwriting they allowed, in their “guaranteed issue” requirements regarding people with preexisting conditions, and in permitting or preventing coverage denials for certain medical conditions. |
| Current State of Cross-State Sales | Six states have enacted laws to allow cross-state sales: Georgia, Kentucky, Maine, Rhode Island, Washington, and Wyoming. However, none of these states have had a new insurer enter its market because of this law. |
| Impact on Costs | Critics argue that cross-state sales would not lower costs for consumers. They contend that out-of-state insurers would have difficulty establishing networks that can compete with established in-state carriers, making it hard to offer competitively priced plans. Proponents, on the other hand, believe that cross-state sales would inject competition and lower costs. |
| Impact on Competition | Critics argue that cross-state sales would not increase competition. Proponents, however, believe that it would encourage competition, giving consumers more affordable choices. |
| Impact on Policy | Critics argue that if insurers sold plans across state lines, bare-bones catastrophic plans with low premiums and high out-of-pocket costs are likely to proliferate. This would appeal to younger, healthier adults but make insurers more reluctant to offer comprehensive policies. |
| Impact on Regulatory Environment | Critics argue that insurance companies would relocate to states with the most insurer-friendly regulatory environments, allowing national health care policy to be dictated by the most permissive states. |
| Impact on Consumer Experience | Critics argue that allowing insurance to be sold across state lines would eliminate the ability of insurance regulators to assist consumers with their concerns and problems about the purchased health insurance product. |
| Telehealth Exception | Some states allow out-of-state providers to practice telehealth in their states through telehealth registrations and by meeting certain state requirements and conditions. |
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What You'll Learn
- Interstate sale of health insurance is unlikely to lower costs or increase competition
- Republicans and conservatives believe cross-state insurance sales would lower consumer costs
- Critics argue cross-state sales would result in a race to the bottom for the individual insurance market
- Prior to the 2010 Affordable Care Act (ACA), state insurance regulations varied widely
- Some states allow out-of-state providers to practice telehealth through telehealth registrations
Interstate sale of health insurance is unlikely to lower costs or increase competition
In the United States, health insurance is regulated by individual states. Prior to the 2010 enactment of the Affordable Care Act (ACA), state insurance regulations varied widely. States differed in the extent of medical underwriting they allowed, in their “guaranteed issue” requirements regarding people with preexisting conditions, and in permitting or preventing coverage denials for certain medical conditions. To sell policies in multiple states, insurers had to comply with each state’s insurance regulations.
The concept of selling insurance across state lines, which dates back to the 1990s, was borne out of frustration with the variation in state regulation. Proponents of cross-state insurance sales argue that if an insurance company were allowed to operate by the rules of just one state but sell plans in multiple states, they could lower the price of their plans, giving consumers new and more affordable choices.
However, critics argue that interstate sale of health insurance is unlikely to lower costs or increase competition. Insurance experts say that the primary barrier for an insurer looking to enter a new market is not the state’s regulations, but rather the cost of building up a provider network at discounted prices. Because out-of-state insurers have no current relationship or market share with in-state hospitals and physician practices, it would be difficult for these insurers to establish networks that can compete with established in-state carriers. This would make it hard for out-of-state insurers to negotiate sufficiently low payment rates to enable them to offer competitively priced plans.
Furthermore, if insurers sold plans across state lines, bare-bones catastrophic plans with low premiums and high out-of-pocket costs—which tend to appeal to younger, healthier adults—are likely to proliferate. As the young and healthy congregate in low-premium, high-deductible plans, insurers would become more reluctant to offer comprehensive policies.
As of 2017, six states—Georgia, Kentucky, Maine, Rhode Island, Washington, and Wyoming—have enacted laws to allow cross-state sales. However, none of these states have had a single new insurer enter its market because of its law. State officials and insurance industry experts in those states agree that establishing a competitive provider network is the primary barrier to new market entrants. They also observed that the sheer complexity of how insurance products are developed, priced, and regulated makes it difficult to establish a single cross-state framework for consumer protection.
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Republicans and conservatives believe cross-state insurance sales would lower consumer costs
In the United States, health insurance is regulated by individual states, and insurance companies are required to comply with each state's insurance regulations to sell policies in that state. Historically, state insurance regulations have varied widely, leading to the concept of selling insurance across state lines, which dates back to the 1990s.
Republicans and conservatives have proposed health reforms that would allow insurance companies to sell their policies across state lines. They argue that this would increase competition in the individual market, leading to lower costs for consumers. With more insurance providers in the market, consumers would have more choices and could potentially access more affordable plans.
However, critics argue that cross-state insurance sales are unlikely to lower costs or increase competition. They contend that out-of-state insurers would struggle to establish networks that can compete with established in-state carriers. As a result, they may only be able to offer plans with higher premiums, providing no net benefit to consumers.
Additionally, critics warn that cross-state insurance sales could lead to a "'race to the bottom'" in the individual insurance market. Insurance companies may relocate to states with the most insurer-friendly regulatory environments, effectively dictating national health care policy from these permissive states. This could result in the proliferation of bare-bones catastrophic plans with low premiums and high out-of-pocket costs, which may appeal to younger and healthier adults but may not provide adequate coverage for those with more extensive health needs.
While six states have enacted laws to allow cross-state insurance sales, none have attracted new insurers due to the challenges of establishing competitive provider networks and the complexity of developing, pricing, and regulating insurance products across multiple states.
In summary, Republicans and conservatives believe that allowing insurance sales across state lines would introduce competition and lower costs for consumers. However, critics argue that this could lead to a "race to the bottom," with limited benefits for consumers and the potential for inadequate coverage.
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Critics argue cross-state sales would result in a race to the bottom for the individual insurance market
In the United States, health insurance is largely regulated by individual states. Prior to the Affordable Care Act (ACA) of 2010, state insurance regulations varied widely. States differed in the extent of medical underwriting they allowed, in their “guaranteed issue” requirements regarding people with preexisting conditions, and in permitting or preventing coverage denials for certain medical conditions.
Some critics argue that allowing insurers to sell policies across state lines would inject competition into the individual market, which would lower costs for consumers. However, others disagree and argue that cross-state sales would result in a race to the bottom for the individual insurance market.
The critics' argument is based on the idea that insurance companies would relocate to states with the most insurer-friendly regulatory environments, allowing national health care policy to be dictated by the most permissive states. As a result, bare-bones catastrophic plans with low premiums and high out-of-pocket costs are likely to proliferate. These plans tend to appeal to younger, healthier adults who expect to use minimal health care services. Consequently, insurers would become more reluctant to offer comprehensive policies, leaving those who need more extensive coverage with fewer options and potentially higher costs.
Furthermore, cross-state sales of insurance are unlikely to produce any significant cost savings for consumers. Out-of-state insurers lack established relationships and market share with in-state hospitals and physician practices, making it difficult for them to compete with established in-state carriers on pricing. This dynamic could lead to higher premiums and decreased access to affordable health insurance for consumers.
While some states have passed laws allowing cross-state sales, as of 2017, no new insurers had entered these markets due to the challenges of establishing competitive provider networks and the complexity of developing, pricing, and regulating insurance products across multiple states.
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Prior to the 2010 Affordable Care Act (ACA), state insurance regulations varied widely
In the United States, health insurance has historically been regulated by individual states. Before the Affordable Care Act (ACA) was passed in 2010, these state insurance regulations varied significantly. States differed in the extent of medical underwriting they allowed, in their "guaranteed issue" requirements regarding people with pre-existing conditions, and in their approach to permitting or denying coverage for specific medical conditions.
The concept of selling insurance across state lines emerged in the 1990s due to the frustration with varying state regulations. Proponents of cross-state insurance sales argue that it would enable insurance companies to offer more affordable plans to consumers by allowing them to operate under the rules of one state while selling plans in multiple states. They believe that it would inject competition into the individual market, driving down costs.
However, critics argue that cross-state insurance sales would not lead to cost savings for consumers. They contend that out-of-state insurers would struggle to establish networks that can compete with established in-state carriers. As a result, they would only be able to offer plans with higher premiums, providing no net benefit to consumers. Additionally, critics warn that insurance companies would relocate to states with the most insurer-friendly regulatory environments, effectively allowing national health care policy to be dictated by the most permissive states.
Prior to the ACA, high rates of uninsured individuals were prevalent due to unaffordability and exclusions based on pre-existing conditions. The ACA aimed to address these issues by creating a more uniform system of rules for health insurers. It expanded Medicaid to individuals with incomes up to 138% of the federal poverty level, established regulated health insurance exchange markets, and introduced new regulations on private health plans to limit how they charge higher premiums.
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Some states allow out-of-state providers to practice telehealth through telehealth registrations
In the United States, health insurance is regulated by individual states. Prior to the 2010 enactment of the Affordable Care Act (ACA), state insurance regulations varied widely. While some states allowed cross-state sales of insurance, others did not. The ACA created a more uniform system of rules for health insurers, but states still play a leading role in regulating health insurance.
Under current law, you must buy health insurance in the state in which you have your permanent address. If you move to another state, you will need to buy a health insurance plan in that state. Some states have temporary practice laws to support existing provider-patient relationships.
While insurance companies are generally restricted to selling policies within a single state, some states allow out-of-state providers to practice telehealth through telehealth registrations. Licensed out-of-state providers may provide telehealth services after completing registration requirements, which vary by state. For example, in Arizona, out-of-state providers must register with the state's applicable healthcare provider regulatory board or agency, register with the controlled substances prescription monitoring program if prescribing controlled substances, pay the registration fee, and hold a current, valid, and unrestricted license to practice in another state.
There are many compacts between states that make it easier for healthcare providers to practice telehealth across states. The US Health and Human Services Administration maintains a website that summarizes information related to interstate licensure. Some states have temporary practice laws to support existing provider-patient relationships, especially for transient populations, such as young adults attending college or retirees who live in different states during certain seasons.
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Frequently asked questions
No. Under current law, you need to buy health insurance in the state in which you have your permanent address. If you move to another state, you will need to buy a health insurance plan in that state.
States have historically played a leading role in regulating health insurance. Before the 2010 enactment of the Affordable Care Act (ACA), state insurance regulations varied widely. States differed in the extent of medical underwriting they allowed, in their “guaranteed issue” requirements regarding people with pre-existing conditions, and in permitting or preventing coverage denials for certain medical conditions.
It's hard to say. Many Republican health reform proposals suggest that insurance companies should be able to sell their policies across state lines. Proponents of this change believe it would inject competition into the individual market, which would lower costs for consumers. However, critics argue that it would do little to lower costs and that it could become a race to the bottom, with insurance companies relocating to the most insurer-friendly states.
