NAHU submitted comments to CMS on Monday in response to the request for information issued in March on how to eliminate barriers for insurers to sell health insurance coverage across state lines. The RFI was in response to President Trump’s October 2017 executive order and their subsequent rulemaking on expanding the availability of Association Health Plans, short-term plans and HRAs.
NAHU has long expressed concerns about selling insurance across state lines due to issues with uneven state oversight and the negligible advantages of doing so, and we stressed the importance of not preempting or impeding on the role of states as the primary regulators of health insurance. We strongly believe that allowing the sale of health insurance coverage across state lines would have no positive impact on health insurance markets or healthcare costs and competition in any state, and that because the ACA already established the legal authority to do so, despite states and insurers choosing not to take action, no additional federal action is warranted.
The proposal sought recommendations on how states can apply Section 1333 of the ACA to increase consumer choice and competition by eliminating regulatory, operational and financial barriers for the interstate sale of insurance. Currently, states are permitted to enter into “Health Care Choice Compacts” under Section 1333 of the ACA to facilitate the sale of plans in two or more states. Insurers offering plans in other states would be required to be licensed in all states where the plans are sold and must comply with the originating state’s rules on market conduct, unfair trade practices, network adequacy, and other consumer protections. Additionally, consumers must be informed that these policies are not subject to the rules in the state where it is being sold.
Of the four states that passed legislation authorizing interstate sales of health insurance, Georgia, Maine, Oklahoma and Wyoming, none have taken the step to authorize a compact or requested CMS to approve a compact. Further, no insurers in these states have indicated any intention to offer plans under this regulatory framework.
Our comments underscored our concerns about the concept, and the redundancy that such regulation would create:
- Section 1333 of the ACA provides ample authority for states to create and implement interstate health insurance compacts, and existing state authority under the McCarran-Ferguson Act already gives state policymakers the ability to allow for and facilitate coverage across state lines. There is nothing in federal law or regulation precluding state-level lawmakers from already permitting this practice.
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No state has taken action to allow the sale of health insurance coverage across state lines, as doing so would have no positive impact on health insurance markets, healthcare costs, or competition in any state.
- Costs have significant variances from state to state, and substituting another state's legal requirements would not make it less costly to provide access to medical care in high-cost states, particularly with costs of contracting with providers and maintaining networks.
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Any administrative savings obtained by selling the same plans across state lines through a compact would also create new challenges, including advertising, legal and oversight costs.
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It would be premature to speculate on any impact to QHP access if individual states move forward with implementing a Section 1333 compact.
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Federal legislative action would be necessary to facilitate the sale of short-term, limited-duration insurance (STLDI) or state-regulated farm bureau coverage, although we do not believe that additional federal legislative action to do so is warranted at this time, either by consumer demand or by market necessity as STLDI is already marketed and sold across state lines, according to existing agreements and market arrangements.
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There are significant financial challenges for smaller issuers looking to develop competitive and high-quality provider networks in other states and there is a high cost associated with establishing and maintaining networks for national carriers with existing comprehensive provider networks.
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We do not believe that any additional consumer protections would be necessary, given that the protections of the ACA for all individual-market consumers remain in place, and the compacts would not preempt or impede state law or other roles of states as the primary regulators of health insurance.
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