The pros and cons of selling health insurance across state lines

Obamacare has not done much to slow the growth of health care costs. Government actuaries project that health spending will grow 5.8% a year over the next decade — substantially faster than growth in the economy. Could Republican proposals to sell health insurance across state lines bend the cost curve and make premiums more affordable?

The idea seems simple enough. Right now, if you are buying your own health insurance, that coverage must be sold by an insurer regulated in your state. Instead of a national market, health insurance is sold in 51 state markets (including D.C.) with differing regulations.

According to proponents, insurers should be allowed to sell health insurance according to the rules of a single state of their choosing, regardless of where their customers live. That would promote “regulatory competition” among the states, who would have an incentive to attract insurers by reducing unnecessary regulation. Insurance costs would decline as plans become tailored to the demands of consumers, rather than continuing to provide a list of benefits that increase costs but do not provide value for major segments of the market.

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