Allowing insurers to market healthcare policies across state lines is one of President Donald Trump's main ideas to cut costs. While supporters of the idea cast it as a way to make insurance policies more competitive, critics say it's unlikely to result in more affordable plans and could undermine stronger consumer protections in states such as California and Hawaii. Such a "race to the bottom" could leave some older consumers with health problems unable to afford coverage.
And there is another complication: Trump's proposal seems unlikely to pass the Congress unless the Democrats cooperate. Congress aids involved in health care legislation say that the proposal to allow cross-state insurance sales would need 60 votes in the Senate. In his speech to Congress, Trump said the nation must turn to new ideas to help control costs.
The estimated 20 million Americans who buy coverage directly from an insurer would be affected. Their health plans are regulated by state governments, which decide the minimum benefits that need to be covered and mediate disputes between insurers and their clients, including consumer protection. The variation between states was extreme until former President Barack Obama Affordable Care Act, which raised the minimum standards for legal coverage nationwide.
Trump's proposal on cross-state sales "would eviscerate the ability of state legislatures and state governors to decide what consumer protections are appropriate for consumers and businesses in their state," said Dave Jones, a Democrat which regulates some of California's health plans as Elected Insurance Commissioner.
Medicare is much like real estate, to the extent that costs reflect local conditions. If an insurance company based in an inexpensive state such as Utah is allowed to sell policies in a high-cost state such as New York, its premiums for New Yorkers would reflect the medical costs in their own state, not Utah.
Economist Joe Antos of the business-oriented American Enterprise Institute, said the idea of cross-state health insurance has an instinctive appeal because Americans have seen competition drive down costs in other areas, from credit cards to air travel. "You have to have competition at the service-delivery level, as well," Antos said. "
Cross-state insurance is popular with conservative lawmakers who believe that state-wide regulations require people to buy coverage that they do not want or do not need and increase costs to consumers, Especially those who are young and healthy.
In his speech to Congress, Trump projected a sense of confidence about his health care proposals as he challenged Republicans and Democrats to work together. Sen. Ted Cruz, R-Texas, said there's a "strong consensus" for cross-state sales. But behind the scenes on Capitol Hill, there's lots of uncertainty about whether the proposal will get very far.
