A Better Way Forward: Permit the Purchase of Insurance Across State Lines

A BETTER WAY FORWARD
PERMIT THE PURCHASE OF INSURANCE ACROSS STATE LINES

Our health-care system creates unnecessary regulatory barriers that severely limit many Americans’ insurance options.

State regulations and benefit mandates are often elaborate and expensive—requiring all plans to carry coverage for specific conditions that affect only a small portion of the population but may have powerful political constituencies pushing for coverage. While such mandates make health coverage more expansive, they also make it more expensive, and thus put it out of reach for many families and increase the number of uninsured Americans. The state-by-state insurance market also limits the portability of health insurance, since moving to a new state generally requires obtaining a new policy. The result is a patchwork of state markets with excessive costs and too few options for consumers.

Our health-care system should not needlessly increase the regulatory burdens that make insurance so expensive. A better system would allow for more options and permit consumers to choose the plan that best suits their needs, regardless of the state in which they reside.

Key reforms for achieving that goal include:

• Establishing straightforward rules by which consumers in one state could purchase a policy issued in another and be subject to the regulations, consumer protections, and requirements of the state in which the insurance is issued.

• Requiring states to recognize insurance policies issued in other states and to permit their residents to purchase any insurance policy approved in any state.

• Working with states to establish an electronic marketplace through which consumers, if they chose, could consider state-approved options from any state regardless of their own state of residence.

Reforms like these would create a competitive national market in health insurance, spurring competition both among insurers and among states, which would have a strong incentive to promote innovation.

Informed consumers, not the political machinations of interest groups, regulators and legislators, are the key to making health insurance more affordable and accessible in America.