By Richard D. Kocur. He is an assistant professor of business at Grove City College. He specializes in marketing and business strategy and has over 25 years of experience in the healthcare industry.
"In a recent television interview,
Aetna CEO Mark Bertolini, head of one of America’s largest health
insurers, commented that selling insurance across state lines is “an
outdated concept” in these days of the Affordable Care Act (ACA).
Bertolini went on to explain the rationale for his statement: “Insurance
products are now tightly aligned with networks, so buying an insurance
product from another state, that’s tied to a network in another state,
really doesn’t work for people seeking care.”
The sale of health
insurance as interstate commerce is often cited as a pillar of
healthcare reform by proponents of market-based solutions. In fact, I
offered up this idea in a previous article
as one of the ways to return empowerment and control to Americans
seeking quality, affordable healthcare in the aftermath of Obamacare.
While there are a number of issues that would need to be resolved in
order to make healthcare across state lines work, they are not
insurmountable, nor is the concept outdated.
At one time, nearly
all individual health insurance was regulated at the state level. Each
set of state regulations established insurance mandates requiring plans
within the state to cover a specific set of treatments. With the passage
of the ACA, the federal government usurped health insurance regulatory
control from the states making the individual mandate even more onerous.
As the last year of Obamcare demonstrated, insurance mandates raise the
cost of premiums. Younger, healthier individuals are forced to pay more
for insurance due to mandated coverages they do not need or want. If
individuals were able to purchase insurance across state lines and
tailor their coverage, costs would decrease and, in time, create more
competitive insurance markets. Some speculate that the interstate
commerce of health insurance may even draw individuals currently
enrolled in employer-sponsored plans — Aetna’s bread and butter — in
favor of less expensive out-of-state individual plans. In order for any
of this to occur, however, the repeal of Obamacare must return
regulatory control of health insurance to the states.
Once
regulatory control is returned to the states, insurers in those states
could begin to craft offerings which reflect the desires of the
marketplace. It’s here that Mr. Bertolini’s statement regarding provider
networks comes into play. How could a woman in Oregon purchase health
insurance, allowing her to see her local doctor, from an insurer in Ohio
with ties to a network of Ohio doctors? The answer is: She couldn’t —
for now.
Networks are established when health-insurance companies
contract with healthcare providers in order to serve their policy
holders. Building provider networks is a time-consuming process and will
not happen overnight, but it will happen. While a nationwide solution
would be ideal, it is likely that the health-insurance market would
evolve slowly at first, focusing around large metropolitan areas near
state lines. The proximity of eastern Pennsylvania, metro New York, and
New Jersey, as well as eastern Maryland, Washington, D.C., and northern
Virginia, serve as examples. The next evolution in across-state-lines
health insurance would likely be the emergence of a handful of larger
regional insurers offering a variety of plans across multiple states. As
provider networks grow and risk pools and product offerings increase,
more individual Americans will enjoy greater healthcare choice, access,
and affordability.
Crossing the line with American’s healthcare is
not for the impatient, but unlike the Edsel, disco, or rotary phones,
the idea of pursuing greater market-based reforms in our healthcare
system will never be outdated."
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