With a multitude of articles being released this week post-election, a common thread appears that changes could be afoot for the Affordable Care Act (ACA) and health insurance in general. Throughout President-elect Trump’s campaign he made it clear that he intends not just to repeal the ACA, but also replace it with something new.
Via the President-elect’s website, he makes two comments that he plans to act upon: “To maximize choice and create a dynamic market for health insurance, the Administration will work with Congress to enable people to purchase insurance across state lines. The Administration also will work with both Congress and the States to re-establish high-risk pools.”
Another recent article released by Proskauer’s ERISA Practice Center states concrete details are lacking at the moment, but the following are possible components of his replacement plan:
- Expansion of health savings accounts, including increased contribution limits, and improved price transparency from healthcare providers.
- Insurance companies would be able to sell policies across state lines.
The idea of interstate competition for insurance policies can be found in most forecaster’s minds these days. One may be surprised to know that nearly half of the states across the US have either signed into law the capability to support this or have considered it in recent years. North Carolina reviewed this in 2009-10 but did not pass a law for out-of-state health purchases (2009 S 725). So while it sounds like a good idea, only three states have established laws and formed Interstate Health Compacts (which were establish under PPACA Section 1333) that would permit them to sell insurance outside their state boarders. You can find the list of states that have either reviewed such legislation or have already signed into law here.
Insurance firms in each state are protected from interstate competition by the federal McCarran-Ferguson Act, which grants states the right to regulate health plans within their borders. This has led us to more than 1,900 state mandates across the US, requiring coverage of certain items or procedures, leading to higher premiums.
The concept of interstate selling of insurance leads to competition, which would allow a consumer to shop for individual insurance and select a plan that best meets their needs and budget. With the focus now turned on what can replace the ACA, we may see our state and others review their laws that would permit interstate selling of insurance policies. Many people believe the lack of competition in the insurance industry has been one of the biggest problems of the past ten years. It will be interesting to see how this unfolds.