A Proposal for Interstate Health Insurance

House Republicans are proposing legislation that would allow people in one state to buy health insurance in another. The idea is to give consumers greater choice and more opportunities to save money on premiums. Opponents say that bargain hunters might end up with policies that don't provide adequate coverage.

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This week the House of Representatives is expected to approve several health-related bills. The list includes one to cap damages in medical malpractice lawsuits. Now most of these bills have passed the House several times before only to die in the Senate; they do face stiff opposition. But Republicans are now pushing a new idea to expand health insurance, and it's an idea that's giving Democrats fits. Here's NPR's Julie Rovner.

JULIE ROVNER reporting:

Unlike most health insurance provided by employers, health insurance policies bought by individuals are regulated by individual states. That means you can only buy a policy approved by your state's insurance department. Arizona Republican Congressman John Shadegg says that's a problem for two reasons. First, many states require coverage of a broad array of treatments, everything from cancer and infertility treatments to acupuncture and massage therapy. Shadegg says that can run up the cost of insurance, putting it out of reach for many.

Representative JOHN SHADEGG (Republican, Arizona): Right now, in the insurance market, we're saying in many states you must buy not just a Cadillac, you must buy a Rolls-Royce. You must buy this policy that has soup to nuts in it, and oh, by the way, if you can't afford that one, then you get nothing.

ROVNER: At the same time, he says, in many states there are few companies selling individual policies.

Rep. SHADEGG: Indeed, in most states, one company has 80 percent to 95 percent of the market. Basically, consumers have one choice, and it's a take-it-or-leave-it price.

ROVNER: So Shadegg came up with a simple idea. Why not let individuals in one state buy health insurance from companies regulated by other states? Not only would that create some competition that could force premiums down, he says, it would also let individuals decide how much coverage they want.

Rep. SHADEGG: This will let people in the individual market have the choice of buying a kind of a basic policy that covers the big things that they're really scared of, but does not include everything that their state currently mandates as a benefit. So if their state mandates hair replacements, they can say, `You know, I'm just going to hope that I don't get a disease that causes my hair to fall out, and if I do, I'll buy my own wig.'

ROVNER: But Democrats, who spent more than eight hours debating the bill at a committee work session last week, say the measure would do more harm than good. The problem isn't hair replacement, says Congressman Sherrod Brown of Ohio, but ailments that can be much more serious and that may not be covered by cheaper policies.

Representative SHERROD BROWN (Democrat, Ohio): People want to know if they buy an insurance policy, if they have a health problem, whether it's diabetes or whether it's cancer or whether it's any kind of disease they didn't expect to get, as most people don't, that they will in fact have insurance for it. If this bill becomes law, all kinds of Americans are going to find out at the wrong time that they don't have the insurance they thought they had.

ROVNER: The nation's insurance regulators are worried about the bill, too. Mike Kreidler is insurance commissioner of Washington state and represented the National Association of Insurance Commissioners at a hearing on the bill last month. He says insurance regulators fear the bill will prompt a, quote, "race to the bottom by insurance companies."

Mr. MIKE KREIDLER (Insurance Commissioner, Washington State): The states that do offer health insurance are going to be those with the least regulation; are going to be those with the least resources to aid consumers. Now we as states, by being pre-empted from our authority to be able to intervene for consumers, are going to be left not able to represent them.

ROVNER: In other words, that if an individual in New Jersey buys a policy from Montana and has a problem, he or she may have trouble getting help. Shadegg says the bill has already been altered to give insurance commissioners some authority to enforce other states' policies, but the bill is still likely to face spirited opposition when it gets to the House floor. Julie Rovner, NPR News, Washington.

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