- Payers, providers and state officials are urging CMS to refrain from plans to build on the Affordable Care Act's Section 1333, which allows for sale of health plans across state lines. The agency's call for feedback drew a chorus of opposition from the groups, contending the policy would harm consumers, destabilize local markets and undermine state sovereignty.
- CMS Administrator Seema Verma sought comments on the idea in March, arguing that interstate insurance sales regulations could stimulate competition and lower costs. Virtually all stakeholders — the American Hospital Association, America's Health Insurance Plans and the National Association of Insurance Commissioners among them — said they were not on board.
- Opponents of more interstate plans argue states are already able to sell insurance across state lines by entering into agreements. State regulators like Pennsylvania Insurance Commissioner Jessica Altman has advised against the administration's plans for allowing the interstate sale of associated health plans, arguing it could invite a "race to the bottom" that only stands to benefit insurers.
Cross-state health plans have not been successfully used in any of the six states where interstate insurance laws have been enacted, according to the National Conference of State Legislatures. The concept hasn't been abandoned by conservative lawmakers, however, and has resurfaced in a number of Republican reform proposals since the mid-2000s.
Opponents have maintained the argument that interstate insurance regulations would result in the sale of stripped-down plans and higher out-of-pocket costs.
"Some insurers will migrate to the states with the least stringent coverage requirements," Altman said in her comment to CMS. "Coupled with a marketing strategy to aggressively target the healthiest individuals, this will skew the market adversely against less healthy individuals."
Out-of-state insurers would not be subject to the same laws as their competitors, now left bearing the brunt of the high-risk population. Insurance officials like Altman and her NAIC peers feel these plans would undermine their regulative authority and ultimately compromise their ability to shield consumers from any fallout. If low-risk patients on an out-of-state plan were to fall ill, their home-state regulator would not be able to protect them.
Several groups argued states already have the authority to permit interstate sales through Section 1333, and should maintain control over their markets without interference from federal rulemaking. AHIP policy executive Jeanette Thornton said the trade group wants to preserve state regulators' authority. AHIP recommended CMS work in tandem with NAIC on any "new initiatives" involving state compacts.
States, however, are not keen on the idea. As Trinity Health policy executive Tina Weatherwax Grant opined, neither are insurers.
"To the extent issuers are not interested in pursuing sales across state lines, we believe that it makes little sense to promote this conceptually," Weatherwax Grant commented.
AHIP asked CMS to take steps toward expanding and strengthening provider networks, which it believes are essential to spurring competition among both providers and health plans. Federal action to "restrict, promote or mandate the details of how provider networks are developed will interfere with the power of the free market to drive health care prices down and serve consumer demand for a variety of products with different network types at different price points," Thornton wrote.