Ilovebenefits’s Blog

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Selling Health Insurance Across State Lines

Editor’s note: As the health reform bills move their way through Congress with many good ideas, those ideas will be transformed by various stakeholders into what is best for that group. Congress cannot legislate and the agencies cannot regulate to a point of control to prevent this transformation. What seems like a good idea now, may not turn into one later. That is why pilots are so critical when you are talking about one-sixth of the US economy.

Healthcare overhaul bills working their way through Congress could jeopardize laws in California and other states that require insurers to pay for treatments such as AIDS testing, second surgical opinions and reconstructive surgery for breast cancer patients.

What’s more, the federal legislation could make it virtually impossible for states to enforce other consumer protection laws, such as the right to appeal if an insurer denies coverage for a particular treatment.


Democrats, on the other hand, generally oppose interstate sales and have defeated earlier efforts in Congress to allow them. Opponents fear that allowing insurers to sell across state lines would trigger a “race to the bottom,” in which insurers compete to sell bare-bones policies at the lowest price, lacking benefits such as maternity care.

Interstate sales “is insurance code for picking their rules,” said Jerry Flanagan, patient advocate for Santa Monica-based Consumer Watchdog. “The insurance companies will all run to Wyoming to issue policies, and Wyoming laws would rule in California.”,0,2437457.story


November 16, 2009 - Posted by | Federal Government, healthcare | , , ,

1 Comment »

  1. I understand, if we allow insurance companies to sell across state lines, they will inevitably compete on price in an ever downward spiral to a single option coverage package that competes strictly and remorselessly on price. Assuming that’s true, we’ll see market pressures alone acting to interdict rising costs and serving to eliminate the supposed health insurers’ immoral profit level of 3.3% of gross revenues.

    But, it’s the first assumption – a single option coverage package – that really seems unlikely. For example, when I look for coverage for my automobile I find (a) single limit versus multiple limit coverage’s, (b) uninsured motorist endorsements, (c) policies covering collision damage and those covering only damages to others, (d) policies with coverage limits from $50,000 to millions of dollars, (e) underinsured motorist endorsements, and myriads of other options. For my home insurance there are innumerable different endorsements and coverage ranges – they are nearly too numerous to count. Most people I know dislike dealing with life insurance agents precisely because they offer so many variations it can make one’s head spin. In short, no other insurance market appears to have competition generate a single option package of coverages.

    The argument from consumer advocates fails to pass the smell test in the first instance. The beauty of it is the fact that it comes as a blanket assertion without any explanation of the basis for the statement.

    Comment by Douglas Foss | November 16, 2009 | Reply

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