Health insurance purchases across state lines

I presume they don't suggest it because it would create competition and it would undermine national health care.

What I don't understand is why the right proposes it? It goes against the 10th amendment.

 

The federal government does not have the specific power to regulate issues of state commerce. Therefore, under the 10th amendment this power falls to the state. Currently each state has laws regulating their health care insurance providers. Therefore (correct me if I'm wrong) it would be up to each state to pass laws to allow their citizens to purchase insurance from a company based in a different state. For example, Texas legislature could pass a law allowing Texans to buy insurance from any other state, but these other states would also need to have new laws allowing non-residents to buy insurance from that state's providers. In other words, the federal government could not decree that any U.S. citizen could buy insurance from any state in the union. (Again, I'm open for correction.)

 

In Washington State (I believe) the approved insurance companies pay into an insurance fund that protects the customers if an approved company goes broke. Something to think about when buying unapproved policies.

 

I have often said this is the way to go. Problem is different states have different laws governing the insurance companies. Don't understand that, though, because it certainly doesn't apply to life insurance.

This seems like such a simple solution, to buy over state lines and let the free market sort things out.

I suppose it could be worked out if it is unconstitutional by the Amendment process. Probably most states would get on board, they would not have a reason not to, it could decrease their Medicaid rolls.

Primarily, I think it is in place to protect the profits of the insurance companies.

 

There is somewhat of a precedent. State usury laws were set up to cap interest rates at a certain percent. Credit card companies could not charge more than a particular interest rate based on the state residency of the citizen. But in the late 70's the Supreme Court ruled that national banks could charge interest rates based on the state laws where the card issuing bank was located with no regard to where the end user lived. The result was Citibank setting up their headquarters in South Dakota and several other banks setting up shop in Delaware, states with lax usury laws (or states that changed their laws to attract these banks.)

What about health insurance companies? I know here in Minnesota by law they must be set up as non-profit corporations. Supposing the laws changed and you could buy insurance from any company based in any state? States with less regulations would attract the health insurance companies. They might relocate there to take advantage of the "better business climate." We think it would be a boon to the consumer but maybe it would lead to inexpensive, but shoddy policies with exclusions and high deductibles and other poor features.

 

But not necessarily. Because if they have high deductibles and high premiums, they will go out of business, consumer demand principle, ya know.

 

No, not necessarily. But consider the credit card example. Almost all credit card companies are headquartered in Delaware because of the state with the least regulation. How is that working out for consumers demanding low interest rate cards? Interest rates are at historical lows. I don't know of a card with rates less than 12.99%.

If health insurance companies all located in a state with least regulations say, Texas, and offered similar policies at similar prices there would be no consumer choice. Just the lowest common policy.