Gov. Sonny Perdue is showing the way on how states can implement cross-state selling of individual health insurance. States can voluntarily enter into reciprocity agreements with like-minded states. Together they can create a multi-state market attractive to insurers selling new lower cost comprehensive products.
Nationally, the cross-state concept has been accepted by Republicans and Democrats as a good starting point for bipartisan reform. Studies have shown that up to 12 million Americans would become insured with effective national legislation for cross-state selling. But, while Congress debates, Gov. Perdue creates. His push for free-market insurance reform is embodied in House Bill 1184 (key contact Rep. Matt Ramsey) and Senate Bill 407 (key contact Sen. Judson Hill). Both bills are making their way through the legislative process. The slight differences will likely be ironed out when the two bills are merged.
Both cross-state bills have two major components. First, the legislation promotes a unilateral acceptance of comprehensive individual health policies from other states. As a show of good faith, Georgia would accept individual health policies approved in other selected states without the requirement that they accept policies approved in Georgia. Certain minimum standards and consumer protections are required before accepting such policies.
Second, the real power and value of the cross-state selling concept is to establish a coalition of states with a combined large consumer base that will encourage insurers to develop and bring new low cost affordable plans to Georgia. The current fifty state filing processes take insurers years and millions of dollars in state-specific development costs, administrative mandates, filing requirements and fees.
When new products are developed, Georgia is not usually in the top tier of states for early release. Larger population states get first preference. However, being a part of an expanded multi-state market with 30-40 million population will increase our attractiveness as a key market for existing and new insurers. The proposed cross-state legislation directs the Georgia Insurance Commissioner to be the leader in creating a multi-state coalition with reciprocal health insurance policy approvals.
Some are concerned that legislation circumvents existing coverage mandates. The opposite is true. The legislation requires plans to be comprehensive medical and surgical coverage. Limited benefit plans and restrictive policies are specifically excluded. Many mandates lower costs. For example, according to the National Business Group on Health, the Georgia mandate for colorectal cancer screenings is a cost effective mandate. Advocates for cancer screenings would see the Georgia required cancer benefits sold in coalition states with the associated lower cost. People in other states would get cancer screenings provided by all policies sold under Georgia law.
There is no direct relationship between the number of state coverage mandates and costs. Georgia policies are not high cost because of mandates. Georgia policies are high cost because we lack a competitive market. A few carriers, however well intentioned, dominate the Georgia individual insurance market. Free and open markets always benefit the consumer with more choice and lower costs. They also make insurers better.
Gov. Perdue’s efforts will produce a win-win-win. Insurers win by lowering product development overhead expenses and gaining more customers. Cost shifting to employer plans is lowered when the more of the previously uninsured have coverage. Hospitals and doctors will have fewer bad debts and less uncompensated care. But most of all: Georgians win with more choices of affordable, comprehensive, and portable individual insurance.
The 2010 Georgia General Assembly should favorably consider the cross-state multi-state concepts proposed by Gov. Perdue. Full and adequate consumer protections should be included. Plans should be broad-based comprehensive coverage. This is a strong free-market approach that will help both those currently insured and lower the number of uninsureds. It will not cost the state treasury a single dime, but it will save Georgians millions in lower premiums. Only the most partisan observer or parochial lobbyist could be against this approach. The alternative is Obamacare, but that may be what some objectors really want.
Ronald E. Bachman FSA, MAAA is a Sr. Fellow at the Center for Health Transformation, A Sr. Fellow at the Georgia Public Policy Foundation, and a Sr. Fellow at the National Center for Policy Analysis. Nothing in this article is intended to support the passage or failure of a particular piece of legislation.