To create a cross-state insurance market, legislators would essentially remove state-level barriers to insurance companies wishing to sell individual products to customers in multiple states. Currently, three states allow interstate insurance sales: Georgia, Maine and Wyoming.
Here are four potential advantages and disadvantages of authorizing interstate insurance sales.
1. Proponents of a cross-state insurance market argue it would enhance consumer choice, increase competition and availability and make health insurance more affordable.
2. Opponents argue the highly localized nature of healthcare delivery will impede implementation of multistate health plans. Out-of-state insurers face increased difficulty in building a network of local providers, which can pose a barrier to market entry.
3. Proponents argue interstate insurance sales could reduce consumer spending by allowing them to purchase coverage from a state with less stringent insurance regulations, such as fewer coverage requirements. This means a health plan in a neighboring state could opt out of covering autism, acupuncture or fertility treatments, thereby keeping premium costs lower.
4. The challenge of building provider networks in a different state would pose less of a problem for insurers that offer health plans in metropolitan areas that bleed across state lines. WashingtonD.C. and St. Louis are examples of cities where insurers could build multistate networks that increase regional competition between providers and reduce healthcare costs.
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