CMS wants to make selling out-of-state insurance easier
- CMS is soliciting advice on how it can allow insurers to sell coverage across state lines, specifically through Section 1333 of the Affordable Care Act. The provision introduced "healthcare choice compacts," allowing insurers to enter into agreements with state regulators to sell out-of-state coverage.
- The request for information follows a mandate issued to CMS by President Donald Trump in a 2017 executive order. CMS is looking for feedback on how it can "eliminate regulatory, operational and financial barriers" to create greater access to coverage across state lines, increase competition and "understand the financial impacts of selling health insurance coverage across state lines."
- Selling insurance across state lines is a policy idea long-championed by conservatives, but hardly adopted by states. That's because the concept comes with a bevy of consumer protection and antitrust hangups.
The Trump administration has already encouraged the sale of insurance plans across state lines through controversial association health plans (AHP), which allow employer associations to skirt some of the ACA's core consumer protections.
The National Association of Insurance Commissioners has been vocal about its opposition to allowing the sale and purchase of out-of-state insurance plans, calling the policy idea a "race to the bottom." Insurers, NAIC argues, will seek out states that provide the least amount of regulatory oversight, create imbalances in insurance markets and shirk the consumer protections that come with having state-licensed insurers.
"Evidence suggests that such proposals do not work," NAIC attorney Christina Goe wrote in a report last year. "In states that have already pursued across state lines legislation or tried to form interstate compacts, none resulted in a single insurer entering a new market or the sale of a single new insurance product."
Proponents of allowing the sale of insurance across state lines have argued in the past that the ACA provision isn't the way to go, as it still imposes overly burdensome regulations.
The provision has been considered by states since being enacted, but with little success. Researchers at the Robert Wood Johnson Foundation concluded in 2012 that the biggest obstacles facing out-of-state insurance are administrative complexities — filing a lot of paperwork in different states — and the sheer fact that local regulators just aren't willing to give up authority to other states.
Still, CMS Administrator Seema Verma said the agency is interested in finding a way to make it work. Americans, she said in a statement, are in "desperate need' for more affordable healthcare.
"Eliminating the barriers to selling health insurance coverage across state lines could help provide access to a more competitive and affordable health insurance market," Verma said. "We are looking for information and ideas from the public on how to create a more dynamic health insurance market with more insurers participating and competing to meet the needs of the American people just like we see in markets for so many other products and services that enhance our daily lives."
The RFI is open for 60 days.
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