CMS requests information on cross-state insurance purchasing

The Centers for Medicare & Medicaid Services (CMS) issued a request for information (RFI) this week that solicits recommendations on how facilitate the sale health insurance coverage across state lines.

The RFI comes in the wake of President Trump’s October 12, 2017 Executive Order, “Promoting Healthcare Choice and Competition Across the United States,” which the administration says intended to provide Americans relief from rising premiums by increasing consumer choice and competition.  The Executive Order also proposed expanding Association Health Plans, Short-Term, Limited-Duration Health Insurance, and Health Reimbursement Arrangements.

 

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Currently, under Section 1333 of the Affordable Care Act, states may form interstate compacts that allow insurers in one state to sell qualified health plans to consumers in another state. Since January 2016, sales under Health Care Choice Compacts have been permitted provided the state laws creating the compacts were enacted.

According to a National Conference of State Legislatures report, currently, only six states allow the purchasing of out-of-state health insurance policies – Georgia, Kentucky, Maine, Oklahoma, Rhode Island, and Wyoming. Laws have been proposed in as many as 18 states but have either failed to pass or been vetoed. To date, no state has actually attempted a compact and insurers have shown little interest in pressing the issue.

 

 

The RFI seeks information and strategies to develop a more comprehensive strategy to encourage such sales. In a statement issued by CMS, Administrator Seema Verma explained,

“Americans are in desperate need of more affordable health insurance options. Eliminating the barriers to selling health insurance coverage across state lines could help provide access to a more competitive and affordable health insurance market.  We are looking for information and ideas from the public on how to create a more dynamic health insurance market with more insurers participating and competing to meet the needs of the American people just like we see in markets for so many other products and services that enhance our daily lives.”

However critics, like the National Association of Insurance Commissioners, contend that such sales would actually hurt consumers.  They argue that allowing cross-state sales will incentivize insurers to pick the states with the most favorable regulations, will reduce consumer protections, and will destabilize markets by drawing healthy people to larger, cheaper plans leaving smaller plans to fail.

According to CMS the RFI will be open for comment for 60 days.