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Witnesses Debate Interstate Health Insurance Sales

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Consumers should be able to buy health coverage from any insurer they like, even if that company is licensed outside their home states. [@@]

Rep. John Shadegg, R-Ariz., has promoted that idea by introducing H.R. 2355, the Health Care Choice Act of 2005.

H.R. 2355, which is similar to H.R. 4662, a Shadegg bill that died without reaching the U.S. House floor in 2004, would let a consumer in one state in the United States buy health insurance from a carrier licensed in any state in the country.

The House Energy and Commerce Committee health subcommittee held a hearing on the bill Tuesday.

Mike Kreidler, the Washington state insurance commissioner, spoke at the hearing on behalf of the National Association of Insurance Commissioners, Kansas City, Mo. He emphasized the NAIC’s opposition to the bill.

States have “enacted important consumer protections to ensure access to providers,” Kreidler said, according to a written version of his testimony. “H.R. 2355 would undermine all of these protections. State regulators would be unable to assist their own constituents. In the real world of tight state budgets, it will be virtually impossible to assist a nonresident consumer in a distant state.”

Passage of H.R. 2355 also would hurt the individual health insurance market, by forcing insurers licensed in a consumer’s home state to compete on an unlevel playing field with insurers licensed in other states, Kreidler said.

Dr. Merrill Matthews, director of the Council for Affordable Health Insurance, Alexandria, Va., spoke in favor of the bill.

He noted that variations in state insurance regulation lead to big differences in health insurance prices.

In New Jersey, a state that forbids health insurers from considering age or health status when setting rates for purchasers of individual coverage, individual rates average $4,080 per year.

In Iowa, a state with looser individual market rules, the average annual premium is $1,236, Matthews said.

“We are not advocating for the dissolution of state regulation over health insurance,” Matthews said. “Rather, we want to see more choices for the millions of individual Americans who are currently uninsured because they can not afford all the services and ‘protections’ prescribed by their state.”

Links to the text of the bill and other sources of information about the bill are on the Web at