How Would Insurers Sell Plans Across State Lines?

President Donald Trump and GOP lawmakers have supported driving down insurance costs through various measures, including allowing insurers to sell plans across state lines. The concept is that selling the same plans in multiple states would increase competition and reduce premiums.

“Competition benefits consumers with better options in both insurance and service options,” Rep Marsha Blackburn (R-TN) wrote in a column article on her website. “It has always been my belief that competition allows a pathway for patient-centered care.”

The growing cost of healthcare prompted GOP leaders to devise a repeal and replacement plan for the Affordable Care Act (ACA) over concerns that the current law has caused costs to skyrocket. While the American Health Care Act was pulled from consideration for further revisions, other lawmakers have taken action to enact legislation to improve the ACA marketplaces.

In early March 2017, Sen Ted Cruz (R-TX) introduced the Health Care Choice Act, S 647, which would repeal certain ACA mandates and allow residents to purchase plans in other states.

Sens John Barrasso (R-WY), Mike Crapo (R-ID), Marco Rubio (R-FL), and David Vitter (R-LA) co-sponsored the legislation, while Blackburn has introduced companion legislation in the House, HR 543.

"Every last word of Obamacare must be repealed," said Sen Cruz said in a press release. "And while we continue that fight, we must also send bill after bill to the President's desk to stop its harmful effects. The Health Care Choice Act will reduce costs, force insurers to compete for business and empower consumers to choose a health plan that meets their needs.”

Free-market competition would allow insurance marketplaces to open up to other customers and reduce premiums, according to Blackburn.

Currently, insurance plans are regulated by individual states and differ across the country. However, the proposed approach would eliminate state-specific regulations, and may allow more options presented to customers.

“Republicans must offer the American people alternatives that lower costs and break the status quo that favors big government and big health care business over hardworking Americans. The Health Care Choice Act is one step in that direction,” Sen Cruz said. "This bill is a true market-based reform that will make health insurance more personal and affordable, giving consumers the freedom to select plans that fit their needs, anywhere from Alaska to Texas to Vermont."

The Health Care Choice Act would repeal Title I of the ACA and amends the Public Health Service Act. The proposed legislation would allow insurers to sell plans across state lines, but would require that the plan meet the basic requirements of secondary states.

Insurers would have to pay premium taxes, provide copies of the plan of operation or a feasibility study, written notice of changes in its designation of its primary state, a quarterly financial statement, and consumer protections, according to the release.

In theory, insurers could sell plans in less regulated states to customers living in more highly regulated states, as long as basic requirements were met. Blackburn believes that selling plans across state lines would also reduce unnecessary regulation of state marketplaces, according to the article.

However, it is unclear whether insurers would be in favor of, or opposed to the legislation, and how it would affect premiums.

"Government-run health care has been foisted on the American public. Obamacare has promised a lot to millions of people - with no ability to deliver affordable medical care,” Blackburn said in the release. “Sen Cruz has offered help to these folks. I applaud his effort and I am pleased to see my legislation, HR 543, the Health Care Choice Act was included in this bill."