Health Care Summit Post-Mortem

I can't figure out the logic of buying health care across state lines. If the issue is buying a local policy from an insurer out of state, I am already buying my insurance in NH from the Indiana based Wellpoint/Anthem, which sells insurance using NH providers through its Anthem of NH company. Buying insurance from a Texas insurer which requires I travel to Texas to access its network of providers doesn't seem cheaper. And buying from Wellpoint from the Anthem of Indiana or Anthem of California isn't likely to be cheaper.

@mulp,

I'm not sure I get this either. But I think it has to do with allowing consumers to bypass the regulations put on insurance companies by the states.

It is certainly true that there is a very large spread in the cost of insurance from one state to another, and this seems to be due in large part to variations in the regulatory environment.

If a company operating in a state with low regulation were able to write insurance in a high-regulation state, while still being governed by the regulations in its own state, it could likely undercut the 'native' competition. This would give high-regulation state consumers a lower cost option. It would also tend to pressure states to loosen their regulations, and ultimately allow insurance policies to be better matched to the preferences of the consumers. I suspect this process is what President Obama refers to as a 'race to the bottom'.

Of course to operate in a new state, the insurance company would have to establish relationships with health-care providers there. It presumably wouldn't require its customers to come to its own state for care.

Arnold, do I have it right?

Chris,
That is right. The peculiar thing is that multi-state employers are exempt from state insurance regulations when they provide health insurance to their employees. So if the Democrats don't think that we can live without state regulations, then why do they like employer-provided health insurance?

Either you think state regulations are really, really precious, in which case you should subject employer-provided health insurance to them, or you think that the world can live without the separate state regulations, in which case you should allow them to be overridden in the individual and small-group market.

The "race to the bottom" is not matching consumer preferences to insurance coverage. Instead, it is about profit-seeking insurance companies finding the most lax state that maximizes profits because that states requires the minimum amount of coverage. Insurance companies from states with high cost coverage requirements will see that their profits do not meet the profits of the company based in the low cost state, and will decide to move there. Hence, the race to the bottom as states compete for major national insurance companies to move there by dropping coverage requirements.

Ankur, but what if I want reduced coverage? What if I don't want to pre-pay for services that I'm not interested in? What if I want to pay out-of-pocket for routine care? Buying insurance from a state with less restrictive regulation certainly would help match my preferences.

The key to matching preferences seems to simply be transparency and comparability--things that the government can and should regulate. I'm not sure how a state government telling me I have to buy comprehensive coverage that I don't want matches my preferences.

I still don't see why the Federal government is concerned with how the citizens of New Hampshire handle their health care regulations.

If New Hampshire wants to let its citizens buy health care from Texas, it can let it. If you as a citizen of New Hampshire don't like the law in your state, lobby to change the law or move. We will figure out over time which states' regulations work well.

How does "states' rights" coexist with overriding local preferences? Perhaps you think that there has been regulatory capture in New Hampshire, in which case you should be just as suspicious of regulatory capture of Washington DC

Dan,
The Constitution does not recognize "states' rights" with regard to regulating interstate commerce. Congress made an unusual decision, with the McCarran act, to allow states to regulate health insurance as if it were not interstate commerce. It makes no sense, given that insurance that goes to the employees of multi-state employers is exempt from state regulation.