An important part of Donald Trump’s health care agenda is his pledge to let consumers and employers avoid unwanted regulatory costs by purchasing insurance licensed by states other than their own, a change that would make health insurance both more affordable and more secure. The Congressional Budget Office has estimated that allowing employers to avoid these unwanted regulatory costs would reduce premiums an average of 13 percent. That’s a nice contrast to what Bill Clinton calls ObamaCare’s “crazy system where…people [who] are out there busting it, sometimes 60 hours a week, wind up with their premiums doubled and their coverage cut in half.”
A reporter recently wrote to me: “I’ve talked to many people — health policy experts, regulators, industry leaders — and none of them think it is a good idea. They worry that the policy would promote a race to the bottom, with insurers consolidating in states with the most lenient regulations. They say state regulators would lose their power to protect consumers. They argue that healthy people may save money by selecting cheaper plans, but sick people would end up paying more and/or have trouble accessing care.” Below is my response.
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What you have stumbled across is a grand conspiracy against consumers by industry, regulators, and left-wing ideologues.
The big, incumbent insurers like banning out-of-state purchases, because that protects them from competition.
Providers and patient groups like government mandates that force consumers to buy coverage for their products (mental health coverage, contraceptives coverage, acupuncture coverage, etc.). The freedom to purchase insurance licensed by other states would allow consumers to avoid those unwanted costs.
State insurance regulators like banning out-of-state purchases, because they are in the business of providing consumer protections, and the ban gives them a monopoly. Little wonder they produce what monopolies always produce: a high-cost, low-quality product.
The ideologues want to impose Gruber-style hidden taxes on consumers. The freedom to purchase insurance licensed by other states would allow consumers to avoid those hidden taxes.
It would be embarrassing if these groups said any of this explicitly, so they describe the prospect of losing their privilege as a “race to the bottom.”
Nonsense. There would be no race to the bottom. It would be a race to what consumers want: affordable, secure health coverage.
If letting people purchase insurance licensed by other states would lead to a vastly different health-insurance market than we have right now, it merely illustrates how far astray these groups have led us from the sort of health insurance consumers want.
