Daily News Updates - Health Insurance News

Nominees’ Update on Health Insurance, Pt.4 – A deregulation Trojan?

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What does all this have to do with health insurance? Presumably, if health insurance companies were allowed to sell insurance across state boundaries, the same thing would happen as did in the credit card industry. Currently “insurance companies need to follow the laws [and regulations] of the states where they sell individual insurance plans, just as credit-card companies did before 1978”.

In order to sell health insurance in a given state, these companies must abide by that state’s mandated regulations. These are designed, primarily, to protect the consumer for things like gouging those with poor health. It is important to note that not all states have these regulations in place. In a forthcoming paper for the Center for American Progress, Stephanie Lewis points out "These rules may increase premiums for healthy folks, but they also give people with pre-existing conditions a decent chance to afford health insurance in the market for individually purchased policies”.

With permission to sell health insurance across state lines, this mandate protection may be frustrated. All of our nation’s insurance companies (as happened with credit card issuing banks) would be able to locate in a state with no regulations and sell health insurance in any state, but escape that state’s protective regulations. With the help of a bill presented by McCain's Arizona colleague John Shadegg, these health insurance companies won’t even have to move. All they would have to do is some paperwork with that state’s Insurance Commissioner and pay some taxes to that state.

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