Crossing The Line
On Health Insurance
The sale of health insurance as interstate commerce is often cited as a pillar of healthcare reform by proponents of market-based solutions. But is it actually possible? In this article, Richard Kocur examines the health insurance market and argues that a solution is possible—but it may be a slow process.
In a recent television interview, Aetna CEO Mark Bertolini, head of one of America’s largest health insurers, commented that selling insurance across state lines is “an outdated concept” in these days of the Affordable Care Act (ACA). Bertolini went on to explain the rationale for his statement: “Insurance products are now tightly aligned with networks, so buying an insurance product from another state, that’s tied to a network in another state, really doesn’t work for people seeking care.”
The sale of health insurance as interstate commerce is often cited as a pillar of healthcare reform by proponents of market-based solutions. In fact, I offered up this idea in a previous article as one of the ways to return empowerment and control to Americans seeking quality, affordable healthcare in the aftermath of Obamacare. While there are a number of issues that would need to be resolved in order to make healthcare across state lines work, they are not insurmountable, nor is the concept outdated.
At one time, nearly all individual health insurance was regulated at the state level. Each set of state regulations established insurance mandates requiring plans within the state to cover a specific set of treatments. With the passage of the ACA, the federal government usurped health insurance regulatory control from the states making the individual mandate even more onerous. As the last year of Obamcare demonstrated, insurance mandates raise the cost of premiums. Younger, healthier individuals are forced to pay more for insurance due to mandated coverages they do not need or want. If individuals were able to purchase insurance across state lines and tailor their coverage, costs would decrease and, in time, create more competitive insurance markets. Some speculate that the interstate commerce of health insurance may even draw individuals currently enrolled in employer-sponsored plans—Aetna’s bread and butter—in favor of less expensive out-of-state individual plans. In order for any of this to occur, however, the repeal of Obamacare must return regulatory control of health insurance to the states.
Once regulatory control is returned to the states, insurers in those states could begin to craft offerings which reflect the desires of the marketplace. It’s here that Mr. Bertolini’s statement regarding provider networks comes into play. How could a woman in Oregon purchase health insurance, allowing her to see her local doctor, from an insurer in Ohio with ties to a network of Ohio doctors? The answer is: She couldn’t—for now.
Networks are established when health-insurance companies contract with healthcare providers in order to serve their policy holders. Building provider networks is a time-consuming process and will not happen overnight, but it will happen. While a nationwide solution would be ideal, it is likely that the health-insurance market would evolve slowly at first, focusing around large metropolitan areas near state lines. The proximity of eastern Pennsylvania, metro New York, and New Jersey, as well as eastern Maryland, Washington, D.C., and northern Virginia, serve as examples. The next evolution in across-state-lines health insurance would likely be the emergence of a handful of larger regional insurers offering a variety of plans across multiple states. As provider networks grow and risk pools and product offerings increase, more individual Americans will enjoy greater healthcare choice, access, and affordability.
Crossing the line with American’s healthcare is not for the impatient, but unlike the Edsel, disco, or rotary phones, the idea of pursuing greater market-based reforms in our healthcare system will never be outdated.
By Richard D. Kocur
—Richard D. Kocur is an assistant professor of business at Grove City College. He specializes in marketing and business strategy and has over 25 years of experience in the healthcare industry
Reprinted with permission from The Center for Vision & Values at Grove City College, Grove City, PA