Study Criticizes AHP-Type Health Proposals

Oct 14, 2008

The New America Foundation, a nonprofit, nonpartisan public policy institute, recently released a report, entitled, “Across State Lines Explained: Why Selling Health Insurance Across State Lines is Not the Answer.” The report found that allowing insurers to sell insurance across state lines would have a negative impact on the health insurance market for the majority of people. Click here to read the full report.

To allow for health insurance to be sold across state lines means that insurers could sell coverage to anyone in any state. Insurers would have to follow the rules and regulations of the state in which they are based, rather than those of the state in which a policyholder resides. State insurance commissioners would not have the authority to enforce their rules in their own states on plan offered by an out-of-state insurer.

The report contends that while younger and healthier individuals would benefit from cheaper premiums by buying coverage across state lines, all others would see increased premiums, particularly those who prefer comprehensive coverage. Additionally, the report argues that an across state lines proposal would likely leave more Americans without insurance over time.

The report addresses several “myths” concerning the advantages of an across state lines proposal as it relates to benefit mandates, consumer choice and access, marketplace competition, the elimination of tax preferences for employer-provided health insurance and high-risk pools. The report’s authors suggest that the only way to make an across state lines and high-risk pool proposal work would be in the framework of guaranteed issue and low-income premium subsidies or adequately funded high-risk pools coupled with federal licensure and regulatory oversight of insurers.

Len Nichols, Director of the Health Policy Program at the New America Foundation and coauthor of the report, said “selling health insurance across state lines represents a step backwards not only for the health insurance marketplace, but also and more importantly for the American people who struggle everyday to secure quality, affordable coverage.”

The report is timely as it provides some insight into many of the health care proposals that exist today. Allowing individuals to purchase health insurance across state lines is not a new idea. Similar proposals have failed to pass both chambers of Congress in the past for various reasons. However, as health care reform proponents gear up for the 111th Congress under a new administration, this proposal will likely gain more traction as lawmakers look for solutions to the broken health care system.

NSBA has opposed past proposals to allow insurers to sell insurance across state lines. Previous reports have shown that allowing insurers to sell insurance across state lines does nothing to address the fundamental factors driving health insurance costs. NSBA supports real answers to the ongoing health care crisis. Small businesses deserve effective reform that focuses on individual responsibility, quality care, improved technology and appropriate incentives. Click here to read NSBA’s principles for health care reform.