Buying Insurance Across State Lines

John Goodman summarizes the issue of interestate competition for health insurance:

Every state has mandated health insurance benefits. These are laws requiring insurers to cover services ranging from acupuncture to in vitro fertilization and providers ranging from chiropractors to naturopaths — and there are considerable differences among the states. Although often described as “consumer protections” in every legislative hearing I have ever attended, it is the special interest providers (rather than patients) who are pushing for these laws. …

One thing that would not survive 50 state regulatory regime competition is guaranteed-issue and community rating in the individual market. In the six states that impose such requirements the vast majority of people who are relatively healthy are overcharged so that the small percent who are sick can be undercharged. This form of private sector socialism would quickly dissolve, as the healthy sought cheaper insurance under other regulatory regimes.  …

University of Minnesota economists Steve Parente and Roger Feldman estimate that cross-state purchasing of health insurance would induce 12 million more people to obtain health insurance.