Buying and Selling Across State Lines

[Ann H]

RayNY has a great point, and I actually agree with it. His point is that avoidance of state mandates will lower the premium. Some states have many mandates, some states have few.

However, that is not the reason that politicians are stating for their ideas of "selling across state lines". They are claiming it would increase competition and provide lower rates.

The idea of avoiding state mandates that RayNY talked about is a good one. So, let's say that an OK based insurer sells a product without all of those NY mandates, but prices it for NY zipcodes as well as zipcodes of other places in the nation. The premium would be less for New Yorkers, because there are fewer benefits mandated.

That may work until NY passes a law that all of their residents must purchase supplemental insurance to cover the mandates. Then it's over.

It also brings adverse selection to a national scale. So, let's say that one NY family chooses Oklahoma-based insurance (rated for their NY zip code) because the mandates are the least. The next NY family, with a special medical condition, picks coverage from another state that happens to mandate benefits for that condition. Bingo - adverse selection.

So, then, why would any carrier sell IFP from any state other than the one with the fewest mandates? It's a great race to the bottom.

Game over.

 

[somarco]

avoidance of state mandates will lower the premium.

At one time you could make that case but not so much any more since Obamacare has more mandates than almost any state ever had. Now that all states have GI and community rating the only real difference in NY and OK is the cost of care.

At one time most states use deemer rules where if your policy was approved in one state it was deemed to be approved in another state. States figured out they could charge a lot of money and squeeze new carriers that wanted to operate as a non-domiciled carrier in another.

I don't know that GA was any more strict than other states but when we had 20+ carriers writing here the DOI would put new (or even existing) carriers through the wringer if for no other reason than political.

 

[Yagents]

Interstate Health Insurance Sales Has A Tryout In Georgia But No Takers | Kaiser Health News

 

[somarco]

Bill Custer, a health insurance expert at Georgia State University, said a handful of other states have passed interstate insurance laws similar to Georgia’s, but the effect has been the same.

https://www.youtube.com/watch?v=SjbPi00k_ME

 

[RayNY]

However, that is not the reason that politicians are stating for their ideas of "selling across state lines". They are claiming it would increase competition and provide lower rates.

So, then, why would any carrier sell IFP from any state other than the one with the fewest mandates? It's a great race to the bottom.

Game over.

You're spot on with that. Politicians think it will increase competition and therefore lower costs, but the reality is, it will result in consolidation and a race to the bottom. Can't lower costs when the industry is losing money as a whole (the short payments from the 3r's are obvious proof that losses are systemic).

I think it's also a really interesting legal issue, federal gov't removing the ability of states to regulate themselves. Will be an interesting debate.

At one time you could make that case but not so much any more since Obamacare has more mandates than almost any state ever had. Now that all states have GI and community rating the only real difference in NY and OK is the cost of care.

If ACA is repealed, the mandates and requirements go too. Many states haven't adopted GI/mandates at the state level, they're just accepting and enforcing the federal regulations. Even if they have, nothing says they'll keep it when everything else goes away. There will certainly be states with more or less mandates post-aca, and that is where the opportunity lies.

 

[FLM2]

This concept of selling across state lines is so ludicrous it defies comprehension for one basic reason-

Who are those companies that would do that?

The major insurance companies are all national, why would they compete against themselves by filing plans based in Oklahoma, for example, that operate in Florida against their own plans filed locally?

I doubt that Anthem/Blue Cross of Oklahoma would offer any plans in Florida to compete with Blue Cross Blue Shield Florida or vice versa.

It's just political bs, nothing more, nothing less, and Georgia has already tried it and it didn't work-Tom Price is from Georgia, no one knows that better than him.

 

[somarco]

Selling across state lines didn't fly before Obamacare. Don't see it happening when Obamacare is dead and buried.

 

[RayNY]

This concept of selling across state lines is so ludicrous it defies comprehension for one basic reason-

Who are those companies that would do that?

The major insurance companies are all national, why would they compete against themselves by filing plans based in Oklahoma, for example, that operate in Florida against their own plans filed locally?

I doubt that Anthem/Blue Cross of Oklahoma would offer any plans in Florida to compete with Blue Cross Blue Shield Florida or vice versa.

It's just political bs, nothing more, nothing less, and Georgia has already tried it and it didn't work-Tom Price is from Georgia, no one knows that better than him.

You miss the whole point.

Companies will continue to serve the exact same regions they do now. Same claims, same networks, same name.

But, they will FILE THEIR PRODUCT in another state. A state with less regulations, and possibly, a lower corporate tax rate.

This means they can lower prices, because the product covers less, and they keep more of the profit.

I totally understand that it didn't work in GA, but then again, there's no reason it would. The law was passed in 2011, right as ACA regulations kicked in. Since there was no state in the nation with significantly less restrictive regulations, there was nothing to gain from selling over state lines, so no one bothered. It was destined to fail.

Apply the same law to a highly regulated state, you'd have a different result. Apply the same law to a country where minimums and mandates vary wildly from one state to another, and you'd have a different result.

 

[somarco]

In the 80's self funded group health plans flourished in FL (and possibly other states as well) because they only had to contend with ERISA mandates. FL had a bunch of silly benefit mandates plus they tried to fund their high risk pool with carrier assessments on fully insured plans.

Comparing self funded to fully insured saved around 8% as I recall, not counting the cash flow savings if you had a healthy group.

If we ever see the day when buying and selling IFP across state lines is feasible, and if there are enough carriers left that are willing to venture back in the market, I still don't see the savings being significant.

And there are a lot of "if's" in that statement . . .

 

[RayNY]

If we ever see the day when buying and selling IFP across state lines is feasible, and if there are enough carriers left that are willing to venture back in the market, I still don't see the savings being significant.

And there are a lot of "if's" in that statement . . .

I agree with you. Even in a highly regulated state with a ton of mandates, such as my own NY, I doubt we'd see more than a 10% savings for a plan without the mandates.

Considering there's a 25-30% gap in premium between our cheapest and most expensive plans, and considering we've seen an over 100% rate increase over the past few years, it won't exactly make a difference.

But, to be fair, 10% savings on the most expensive plans actually would make Obama's "$2,500 savings per family" a reality. We have a few family plans over $3,000/month here, and some destined to break $4,000 in 2018 (I think $3629.85 is the most expensive right now, just a 10% increase away).