The pros and cons of selling health insurance across state lines
Consumers and advocates might like the idea of selling health insurance across state lines--it could, after all, increase competition and lower prices, making health insurance premiums more affordable.
But it could also have unintended consequences.
Some worry that if borders open up, states will roll back certain mandated benefits and drop basic consumer protections, notes a new primer from the American Action Forum. It's possible that those low-risk consumers who need these certain mandated benefits will be drawn to that state, causing an adverse selection effect.
Proponents argue variances in state regulations mean that some consumers pay for services they don't want or need, according to the primer. For example, states that offer drug rehab may drive up plan costs significantly. And while some consumers may not want the costly benefit, others in neighboring states may wish they could purchase this coverage.
Industry experts have argued that exchange competition can drive down costs and make premiums more affordable. Case in point: Premiums would have been 5.4 percent lower for silver exchange plans if UnitedHealth had participated, according to the National Bureau of Economic Research, FierceHealthPayer previously reported.
And, especially as the healthcare industry moves toward a more consumer-centric mindset, this concept will provide consumers with exactly what they want: more options at a lower cost.
To learn more:
- here's the primer
Have exchanges boosted insurer competition?
Insurers expect consumer competition to soar in 2015
UnitedHealth's exchange presence to increase competition
4 ways to become more customer-centric