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Purchasing insurance across state lines doesn’t work and causes more problems than it can possibly solve

By James Fieseher, M.D.
Concord (N.H.) Monitor, Jan. 29, 2015

In American politics, ideology often supersedes reason. We don’t have to look any further than in the New Hampshire state Legislature.

State Sen. Andy Sanborn, a Bedford Republican, is sponsoring a bill that would allow New Hampshire residents to purchase health insurance across state lines. He argues that giving New Hampshire citizens out-of-state options will increase competition and lower the cost of health insurance. This works for purchasing automobile and life insurance, so why wouldn’t it work for health insurance?

On the surface, this sounds reasonable, but in fact it is an expression of ideology.

When submitting a claim for auto or life insurance, the insurance company writes a check and the consumer (usually) has the option of choosing where to go to consummate the deal. But with health insurance, the insurance company builds the network and determines which hospitals and which providers are available to the consumer. In other words, a New Hampshire citizen may be able to purchase a cheaper health insurance plan in Alabama, but he might have to travel to Alabama to see a doctor or obtain emergency room benefits.

The only state to actually pass legislation that would allow the purchase of out-of-state health insurance, Georgia, found the experiment to be a total failure. No out-of-state company wanted to participate because it didn’t have the network of doctors and hospitals and couldn’t afford to pay out-of-network fees.

But that’s just the tip of the iceberg. Anyone who has ever had to work with a health insurance company is aware of problems that seem to crop up on a regular basis: prior approvals, pre-existing conditions, out-of-network providers and so on. The Affordable Care Act has helped to reduce some of these, but not all and not well. When that happens, the state insurance officials step in to sort things out.

New Hampshire doesn’t have the budget to oversee out-of-state health insurance companies, which means that New Hampshire residents would have to rely on insurance regulators from other states (where they are not taxpayers and have no electoral voice) to address out-of-state health insurance problems. This would eventually result in greater federal involvement in our health care.

All of this overlooks the fact that the cost of insurance premiums is based upon the overall health of the risk pool – those folks who are enrolled in the policy. As the number of members in the risk pool gets larger, premiums decrease as the cost of care for the less healthy is spread out over a greater number of policyholders. Mr. Sanborn may not like to purchase a plan that covers maternity care, but by doing so, his risk pool is larger and the cost of his health premium is reduced.

The problem is that the reverse is also true. If Mr. Sanborn’s bill were to become law and New Hampshire residents were willing to travel out of state for their health care, then the price of health insurance in New Hampshire would increase as the risk pools diminish. Since we are a state with a relatively small population, then even the loss of a few thousand health insurance members would cause a large rise in the cost of insurance premiums – the opposite effect that Mr. Sanborn intended.

During the New Hampshire primary campaign in 1999, George W. Bush proposed the exact same concept Mr. Sanborn is sponsoring. Yet, despite having a Republican Congress for six years, President Bush never carried through with the idea – because he realized it wouldn’t work.

Mr. Sanborn’s bill makes sense only in the abstract world of ideology. In practice, it has been shown to be costly and unworkable in the only place that has ever tried it.

Ironically, there is a much better way of reducing health care costs and simultaneously increasing outcomes and the quality of care that has been successfully “field-tested” over 100 times: a single-payer system. The United States is the only major industrial nation that does not have a single-payer system of health care. We pay three times as much per person for our care, and we don’t even cover all of our tax-paying citizens.

In a recent report published in the online journal BMC Health Services Research, it was calculated that “the U.S. spent a total of $471 billion in medical billing paperwork and insurance-related red tape.” Switching to a single-payer system would save the United States more than $1 trillion every three years! That cost savings includes: longer life expectancy, more preventative care and total coverage for all citizens. Single-payer is not ideology, it is a system that works in Canada, France, the United Kingdom, Japan, Germany, Sweden, Norway, Switzerland, etc. – you get the idea.

Up until now, when our legislators start to think about health care, they begin by talking with health insurance companies. Maybe it’s time to start with the needs of New Hampshire citizens and then look at various health care systems to decide which system of care best fits our needs. We need to put ideology and special interests aside if we’re going to find a health care solution that is affordable and works.

Dr. James Fieseher is a primary care physician and lives in Dover.

http://www.concordmonitor.com/home/15417979-95/my-turn