Trump readies executive order that will let consumers cross state lines to buy health insurance

Donald Trump is preparing an executive order that will achieve a longstanding goal of insurance reform advocates. 

The president's executive order will reportedly allow individuals to join group plans from out of state.  Current law allows companies to sell across state lines, but due to red tape and resistance by state insurance officials, most companies refuse to take advantage of the opportunity.  The order will allow consumers to join associations and group health plans located in other states.

ABC News:

Current law allows companies to sell health insurance across state lines, but so far few have offered out-of-state policies. To date, although all states have the authority to do so, only six have enacted across state lines legislation.

And even among states that passed laws to allow out-of-state sales, no insurer has entered the market. Skeptics point out the difficulties that companies face in developing a health insurance product that can be sold in multiple states. They include challenges in building a provider network with competitive rates, regulatory and administrative differences across states and the impact on risk pools that could result in higher premiums for less-healthy individuals.

Proponents of the plan insist it can be done.

Sen. Rand Paul, R-Ky, touted the idea Wednesday morning on MSNBC's Morning Joe.

"I believe President Trump can legalize, on his own, the ability of individuals to join a group or health association across state lines to buy insurance," said Paul.

While the White House has not offered further guidance on the executive order Trump mentioned, Paul said he’s discussed his proposal with the president.

His plan would expand Association Health Plans, or AHPs, which function by letting small businesses group together in order to buy health insurance. Paul’s plan would amend the 1974 federal law, the Employee Retirement Income Security Act, or ERISA, under the Department of Labor, and allow non-employer groups, for example alumni associations, to band together and purchase insurance across state lines. Currently, insurance plans are controlled at the state level.

The idea of creating a national insurance market is not new – Republicans for years have touted interstate insurance plans. But they’ve received major push-back from groups like the National Association of Insurance Commissioners, who say that interstate sales would allow insurers to “cherry-pick” the best customers, and older, sicker people could face higher premiums as a result. Out of state providers could also face challenges with building a provider network of physicians and hospitals and the new law would need to be consistent with current provisions under the ACA, according to the America's Health Insurance Plans, which represents companies that sell health insurance.

A national marketplace for insurance is an idea whose time has come.  While the executive order will fall far short of that, it will break down a significant barrier.

State insurance commissioners have carved out their own little bureaucratic fiefdoms, but their time has passed.  The idea that Americans in two different states need different forms of coverage and a different price structure for premiums is absurd.  It's also ridiculous that insurance commissioners can create a regulatory regime that's different from a neighboring state's.  Companies have been prevented from selling across state lines not because it's illegal, but because the bureaucratic roadblocks put in place by insurance regulators make sure it's too unwieldy and too expensive.

Don't expect miracles in premium pricing from this order.  After all, companies still have to offer Obamacare coverage mandates and obey other Obamacare rules.  But if the order starts us on the road to a truly national marketplace, it will be well worth it.

Donald Trump is preparing an executive order that will achieve a longstanding goal of insurance reform advocates. 

The president's executive order will reportedly allow individuals to join group plans from out of state.  Current law allows companies to sell across state lines, but due to red tape and resistance by state insurance officials, most companies refuse to take advantage of the opportunity.  The order will allow consumers to join associations and group health plans located in other states.

ABC News:

Current law allows companies to sell health insurance across state lines, but so far few have offered out-of-state policies. To date, although all states have the authority to do so, only six have enacted across state lines legislation.

And even among states that passed laws to allow out-of-state sales, no insurer has entered the market. Skeptics point out the difficulties that companies face in developing a health insurance product that can be sold in multiple states. They include challenges in building a provider network with competitive rates, regulatory and administrative differences across states and the impact on risk pools that could result in higher premiums for less-healthy individuals.

Proponents of the plan insist it can be done.

Sen. Rand Paul, R-Ky, touted the idea Wednesday morning on MSNBC's Morning Joe.

"I believe President Trump can legalize, on his own, the ability of individuals to join a group or health association across state lines to buy insurance," said Paul.

While the White House has not offered further guidance on the executive order Trump mentioned, Paul said he’s discussed his proposal with the president.

His plan would expand Association Health Plans, or AHPs, which function by letting small businesses group together in order to buy health insurance. Paul’s plan would amend the 1974 federal law, the Employee Retirement Income Security Act, or ERISA, under the Department of Labor, and allow non-employer groups, for example alumni associations, to band together and purchase insurance across state lines. Currently, insurance plans are controlled at the state level.

The idea of creating a national insurance market is not new – Republicans for years have touted interstate insurance plans. But they’ve received major push-back from groups like the National Association of Insurance Commissioners, who say that interstate sales would allow insurers to “cherry-pick” the best customers, and older, sicker people could face higher premiums as a result. Out of state providers could also face challenges with building a provider network of physicians and hospitals and the new law would need to be consistent with current provisions under the ACA, according to the America's Health Insurance Plans, which represents companies that sell health insurance.

A national marketplace for insurance is an idea whose time has come.  While the executive order will fall far short of that, it will break down a significant barrier.

State insurance commissioners have carved out their own little bureaucratic fiefdoms, but their time has passed.  The idea that Americans in two different states need different forms of coverage and a different price structure for premiums is absurd.  It's also ridiculous that insurance commissioners can create a regulatory regime that's different from a neighboring state's.  Companies have been prevented from selling across state lines not because it's illegal, but because the bureaucratic roadblocks put in place by insurance regulators make sure it's too unwieldy and too expensive.

Don't expect miracles in premium pricing from this order.  After all, companies still have to offer Obamacare coverage mandates and obey other Obamacare rules.  But if the order starts us on the road to a truly national marketplace, it will be well worth it.

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