Throughout the country, the price of health insurance is going up. The prices on the federal health exchange are reaching amounts that are forcing people in areas of the country to pay as much as 20 percent in higher premiums if they are unable to find a different policy.
In order to combat rising prices across the country, the logical step for the federal government would be to allow for interstate compacts for health insurance that allow consumers and employers to purchase health insurance across state borders. Almost anything, including Waylon Jennings CDs, life insurance, Colorado Avalanche jerseys, bank accounts, Monty Python movies on Blu-ray, stocks and bonds, Marvel comic books and even George R.R. Martin novels can be purchased across state borders.
Is health insurance so radically different from other financial products that Americans should be barred from purchasing it across state lines and regulations? Right now, according to Forbes, there are only state markets, many infested by iron-clad near-monopolies that routinely avoid getting caught with offering lower quality insurance at higher premiums.
This is why a national market of health insurance is something that must happen. Imagine insurers building multi-state plans around ones that share borders and similar demographics and economic characteristics. This creates larger risk pools that lessen volatility of health-care spending and administrative costs. The result is more people buying insurance on their own. According to the Heritage Foundation, interstate insurance competition would create a system that promotes consumer choice in health care, reduces cost and enhances competitive innovation because officials from different states have the ability to cooperate with each other.
The benefits of the national market will have great impacts in individual states. According to a study done by health economists at the University of Minnesota, a national market would increase health coverage by 49 percent in New Jersey and 22 percent in New York, two states with some of the toughest regulations on buying health care, such as guaranteed-issue and community rating laws. This is because people are not forced to buy policies covering things that they do need because of state regulations.
The same Forbes article points out instances where health insurance policies in Massachusetts must cover at least 49 specified treatments and types of providers. If one does not want or need all 49 of those treatments and providers because it raises the price of the package, currently they cannot buy plans in Michigan which only has 24 treatments.
People should have the right to choose where to buy insurance, whether it is from inside or outside the state. It is clear that allowing consumers to buy health insurance across state lines will increase competition, helping reduce the escalating prices of current health care premiums. There should be little to no worry about a “race to the bottom” where states that abandon any sort of consumer protections would attract the most outside business. How can Congress sit there and continue to deny people the ability to buy more affordable insurance policies? It's not right.
Reach the columnist at ndsmit12@asu.edu or follow @noahsmith1996 on Twitter.
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Editor’s note: The opinions presented in this column are the author’s and do not imply any endorsement from The State Press or its editors.
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