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Health Insurance Reform Daily Mythbuster: No Need for Comprehensive Reform - Simply Allow Selling of Insurance Across State Lines

Health insurance reform opponents continue to spread myths about America's Affordable Health Choices Act, including saying that allowing insurers to sell health plans across state lines would be a suitable alternative to comprehensive health reform. 

Specifically, these reform opponents are proposing, without basic insurance reforms, to expand individual coverage by allowing insurance carriers to offer individual insurance on a nationwide basis under the laws and regulations of a state of their choice.

Instead, America's Affordable Health Choices Act creates a better mechanism to guarantee portability of health insurance - by creating a new marketplace, called the Health Insurance Exchange, for the sale of individual health insurance.  The Exchange is key to assuring an affordable individual health insurance market in every state. 

MYTH:  Instead of comprehensive health reform, simply allowing insurers to sell health plans across state lines would give consumers more choices
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FACT: Without reform and stronger consumer protections, allowing insurers to sell health plans across state lines would drive a “race to the bottom” and effectively gut consumer protections that many states have in place.  It would allow insurers to offer individual insurance on a nationwide basis under the laws and regulations of a state of their choice - allowing them to choose states with the laxest oversight and fewest consumer protections.  In effect, it would allow them to sell nationwide cheap insurance that doesn't offer comprehensive coverage - the kind that shocks consumers with the fine print when they file a claim.

Indeed, the National Association of Insurance Commissioners in opposing this proposal has stated explicitly that it would create a “race to the bottom” and “insurers would be greatly rewarded for licensing their individual products in states with less regulation.”

Millions of Americans who have chronic health conditions or are older would be worse off than they are now - with fewer choices of affordable insurance products that meet their needs.

MYTH: Instead of comprehensive health reform, simply allowing insurers to sell health plans across state lines will significantly expand coverage.

FACT:  The Congressional Budget Office has concluded that enacting such a law “would not have a substantial effect on the number of people who have health insurance coverage.”

Some of CBO's findings are that this proposal would:

  • Cause about 1 million people to lose employer-sponsored insurance.
  • Increase Medicaid spending by $1 billion as a portion of those people who lose their employer coverage would become eligible for Medicaid;
  • Result in an increase in coverage for those who are healthy, but a decrease in coverage for those individuals expected to have higher health care costs - with the overall impact of no net substantial coverage increase.

MYTH: Instead of comprehensive health reform, simply allowing insurers to sell health plans across state lines will lower Americans' premiums.

FACT:  People looking for comprehensive coverage would see their premiums skyrocket.  Under this proposal, older individuals and individuals with chronic conditions wouldn't be able to purchase affordable insurance plans that are written under the laws of a state that doesn't have 'guaranteed issue' regulations - and these are the states that most insurance plans would flock to. 

As a result, the insurance pools in states that offered more oversight and consumer protections would be higher-risk, and lead to much higher premiums for the millions of Americans with chronic health conditions.