COVERAGE: Into the Wild? Taking a Closer Look at Selling Insurance Across State Lines

Who would have thought that less than a month before the election we'd be hearing this much from both presidential candidates about  regulation? The financial crisis has changed more than we care to think about, but in the context of health reform it's brought attention to proposals that would allow the purchase and sale of health insurance across state lines.

Such proposals have been floated in Congress for some time and a version has been incorporated into the platform of Republican presidential nominee Senator John McCain. The basic idea is that insurers would be allowed to sell their products to Americans in any state. The insurer would have to follow the rules and regulations of the state in which it was based—not the home state of the individual or family buying the insurance.

Deceptively simple, the proposal could have a devastating impact on insurance markets, producing dramatic changes in the nature, affordability, and availability of insurance in America.

To explain the truth behind selling insurance across state lines, the New America Foundation released a policy paper and issue brief earlier this week. New America's health policy program director, Len Nichols summarized the findings in post earlier this week, concluding:

The impact on the insurance market would be devastating for consumers trying to find coverage as well as for insurers who do not relocate to states with the fewest regulations. It would push costs and premiums up for millions of people with pre-existing conditions, it would make it more difficult for many Americans to find coverage, and it would lead to less generous insurance options. [...] It will end up with more people in need of a high risk pool. You could in theory make the model work with very well-funded high risk pools. But that would required more money—far more money—than the $7-20 billion the McCain campaign has suggested they would allocate. There are better and ultimately more cost-effective ways of covering all Americans with insurance that gives them meaningful coverage they can count on.

In preparation for the final presidential debate on domestic policy, we'll be doing a series of posts examining the likely impact, the additional risks, and potential (although unlikely) solutions that could make across state lines proposals work for all Americans.