In a number of Republican plans touted as possible replacements for Obamacare, one point glaringly stands out as useless. And that is the ability to purchase your health insurance from a provider in another state. The theory is this increases competition but it in fact does nothing of the sort. So here are a few thoughts on this ‘free market’ addition to health care.
First, this totally goes against the long held Republican stance of states rights. Currently each state has it’s own Commissioner of Insurance who oversees the various insurance companies that offer coverage in their state. Allowing purchasing across state lines violates the sanctity of each state’s control over their insurance environment. Now I realize this is a quibble but it is interesting to see which item in the GOP ideology has precedent over any other one. And to me a right as important as health insurance shouldn’t even be in the purview of individual states. It really needs to be a federal program so it is in fact portable across the nation.
Second, suppose this does come to pass and I find a great plan that is significantly cheaper in Illinois. But after a while I have an issue with the insurance carrier…who will help me come to a solution with the insurance carrier? The commissioner in Wisconsin? He/she does not have authority over an insurance company in Illinois. The Illinois commissioner? Why would he/she feel responsible to a Wisconsin resident? Once again, health insurance needs to be a national program.
Third, have you ever inspected your medical care bills after the insurance company has paid their share? The first thing they do is reduce the amount charged to a significantly lower amount that they have negotiated with the health care provider. And then they pay their share and leave the deductible and copay to you. But how do they get to that negotiated lower price? Well it’s through having the provider in their network. And having a customer base large enough that they can guarantee a certain volume of healthcare customers to earn those discounts. So you go to an out of state insurance company. They won’t have the local volume…if they have any other customers beyond yourself…and they won’t have the discounts…and if push comes to shove you may actually end up paying out of network fees…at a much higher rate. Ouch!
So the concept reads great on paper…won’t work in real life…at least not economically. Scratch that concept from the list of viable options.