A common talking point from Republicans is that if you allowed health insurance companies to sell across state lines, it would drive the prices down. This talking point has been echoed by many Republicans, from pundits to politicians, from Bill O’Reilly to Ted Cruz during the Obamacare debate against Bernie Sanders. Even Bill Clinton said that he agreed on this policy during an interview with Bill O’Reilly in 2012.
The main myth? Well, Obamacare, also known as the Affordable Care Act does not prohibit companies from selling insurance across state lines. A provision in the Affordable Care Act allows states to work together for insurance companies to be able to sell in. According to The Hill:
ObamaCare’s little-known provision that allows insurers to sell plans across state lines was tucked inside the 1,000-page law at the time of its passage, though it didn’t go into effect until January 2016. […] Under the law, two or more states can band together into what’s called a “healthcare choice compact.” That means people can buy health coverage from another state that wouldn’t be subjected to the rules of their home state, as long as those states agree.
The provision that allows states to come together, which would allow insurers to sell across those states’ lines, has been put into place by a few states. According to the LA Times:
Georgia, Maine and Wyoming have passed laws enabling such compacts. No other states have joined them, and not a single insurer has expressed any interest in taking advantage of them. According to the Urban Institute, Georgia’s law permits insurers to sell policies that have been approved in other states, and Maine’s law allows the sale of policies approved in Connecticut, Massachusetts, New Hampshire, or Rhode Island.
This myth is quite clearly busted, as states have followed through with the opportunity provided by the provision that allows the states to combine and then allow insurers to sell insurance across state lines, yet insurance companies have never taken them up on their offer.
So, as the states are allowed to come together and allow insurance companies to sell insurance across state lines, why would no insurance companies come forward if it is so profitable as Republicans continually assert?
Well, it turns out that when you study the issue, and not just repeat a slogan over and over again, it is quite obvious that this is an extremely unrealistic idea. As stated by the LA Times:
As industry expert Richard Mayhew of Balloon-juice.com observed early this year, if a law was passed granting a national license to any insurer in any state, “the state with the weakest and most easily bought regulatory structure would have 98% of the viable insurance companies headquartered there within nine months.”
With the idea of “selling insurance across state lines,” what would effectively occur is the flight from regulations, resulting in a vast majority of the health insurance companies going to states with practically no regulations or the least regulations. This will result in skyrocketing premiums in other states with no competition, according to their model, and the poor and sick would be taken advantage of as they would be the victim of the lack of regulation in the health care industry. We would find ourselves in a pre-Affordable Care Act era, in which the healthcare insurance companies can simply deny you insurance on the premises of “pre-existing conditions.”
The saying about allowing “states to sell insurance across state lines” implies that there is some kind of prohibition on the sale of insurance across state lines, which is false. There is a provision in the Affordable Health Care Act that does allow states to collaborate, which, in turn, allows health care insurance companies to sell “across state lines,” however chaotic that would be. This is a horrible idea, and an even worse slogan, which sounds suspect at the surface and even worse when studied and analyzed.
Unfortunately, the “free market” will not function without ample regulation in a commodity that is life and death. This results in cases in which a company must decide if it wants to profit or if it wants to save a human being’s life here on Earth.