Selling Insurance Across State Lines: Excerpts from a Congressional Hearing

Wednesday, the House Energy and Commerce Subcommittee on Health held a hearing on the Health Care Choice Act of 2011 (H.R. 371), which would allow the purchase of health insurance across state lines. The hearing featured testimony from Steve Larsen, Director of the Center for Consumer Information and Insurance Oversight (CCIIO) at CMS and from health financing experts, the American Cancer Society and the American Legislative Exchange Council (ALEC). A summary of the arguments is below.

Proponents
“States have imposed over 2,100 benefit mandates on health coverage. Estimates show that these requirements increase premiums anywhere from 10 to 50 percent.” – Representative Fred Upton (R-MI)

“The best scenario to reduce the uninsured, numerically, is competition among all 50 states where one or more states emerge as dominant players. This scenario would yield a reduction in the uninsured by 8.1 million people.” – Steve Parente, Ph.D., health financing expert, University of Minnesota, who recently completed a peer-reviewed study on purchasing insurance across state lines that will be published in the Journal of Risk and Insurance

Opponents
“Selling insurance across State lines has long been proposed as an option to increase competition and choices in health insurance, but there are serious pitfalls with this approach when it is not coupled with adequate consumer protections. The Affordable Care Act allows health care to be sold across State lines when both States agree and consumer protections are maintained. Without the consumer protections included in the Affordable Care Act, we run the risk of creating an environment where there is a `race to the bottom’ in which insurers have an incentive to sell plans from the State with fewest consumer protections.” – Steve Larsen, Director of CCIIO

“It allows them [insurers] to choose to operate under the laws of states with weaker consumer protection and risk-pooling standards. By doing so, plans will be allowed to cherry-pick the best risk, leaving older, sicker individuals isolated in pools without healthier individuals to offset their medical costs. The result will be insurance markets in disarray, without any real pooling of risk.” – Representative Frank Pallone, (D-NJ)