I think the notion of buying insurance “across state lines” is a misleading consumer cliché.
It misleads by suggesting that people who don’t live in the service area of the other state’s policy, would need to travel to the other state to use their insurance. But that’s not how it would work. The cliché is misleading. Here’s what I think.
I think we need more and less-costly insurance choices in our OWN STATES.
I think to achieve that result, there’s neither need nor logic for buying insurance in another state i.e., “across state lines”. That’s because state lines are not the obstacles – state insurance coverage mandates are the obstacles.
States generally require that each insurance policy sold to its residents include all of that state’s insurance mandates. Some states mandate much more coverage than other states. That means the residents of those states have no choice: they must buy more coverage than residents of other states. That’s a problem because buying more coverage means they pay higher premiums. And there’s nothing they can do about it.
Example. Alabama requires fewer mandates than Connecticut. But Connecticut does not permit sale of a policy that contains only Alabama mandates. Connecticut residents would pay less premium for a policy that contains only Alabama mandates. But they can’t buy it.
The Supreme Court ruled in the 1940’s that the business of insurance is interstate. Many federal insurance laws derive their authority from the interstate nature of insurance – e.g., ERISA and Obamacare. Nevertheless every state still runs a kind of intrastate, legal monopoly over insurance by the use of mandates unique to their state.
My suggestion: modify federal law to require that the coverage in ANY policy approved in ANY state, be available for purchase in EVERY state. This WOULD require the states abandon their monopolistic mandate regulations. It WOULD bring the possibility of some premium relief to consumers in states that have the most mandates. It WOULD allow insurers to sell lesser coverage than present state mandates allow, where they already have service area networks. It WOULD still allow the option of higher-coverage policies everywhere. But it WOULD NOT require everyone have identical basic coverage – as Obamacare does. It WOULD NOT require any insurance company to build a new network anywhere so its policyholders could be in the service area. And it would NOT require anyone to travel to another state to obtain medical treatment.
Is this a radical idea? I think not. Drivers’ licenses are accepted in every state. So are medical licenses, marriage licenses, etc., etc. I believe there’s no good reason to keep state insurance mandates - mandates that trap Americans inside legalized state monopolies and oblige residents of some states to pay higher premiums than residents of other states, for coverage they may not even want to buy.
Why worry about all this now? After all, Obamacare itself mandates a long list of “essential” coverages that every policy must include. Those federal mandates have narrowed coverage differences arising from state mandates. So what’s the problem? Well . . . Obamacare continues to self-destruct. At some point, federally-mandated essential coverages may end. At that point, the choice and cost problems of state-specific coverage mandates return – unless we think of a way to avoid them.
Let’s also keep in mind that this discussion is about medical insurance, not medical care. The cost of medical care is by far the biggest factor in the cost of medical insurance. Purchasing a policy with lesser coverage reduces one’s insurance cost, but does not reduce the cost of medical care. Still, I think this idea is worth considering because it can reduce insurance cost for many people; and it would do this by giving everyone more choices.
Original content copyright © InsureBlog
Source:
http://insureblog.blogspot.com/2017/04/what-does-across-state-lines-really-mean.html
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