Definition: Interstate insurance refers to the selling of health insurance across state lines. Currently residents have to purchase health insurance from a company that offers policies in the state they are residents of. Each state regulates how the health insurance companies in their state are managed, such as what benefits are offered and access to coverage. Some experts agree that selling insurance across state lines through interstate insurance would open up competition and reduce overall health insurance costs.
The idea of selling insurance across state lines has been in Congress since 2005. Since health insurance is regulated by each state, many feel that if people could purchase health insurance from a state that they did not live in then they could get a cheaper health insurance cost, especially if they live in a highly regulated state. Studies have shown that highly regulated states do have higher health care costs. On the other hand, opponents feel that if people were allowed to purchase insurance across state lines it would do the opposite and make costs higher and lower benefits.
Opponents argue that selling insurance across state lines would lower the quality of health insurance for the nation and raise health care costs. They feel that if people started choosing lower quality health insurance policies, those health insurance policies that are not from mandated states, that insurance companies would eliminate benefits that were previously mandated in certain states and that would lead to less quality of care. Also, they feel that young healthy people may get a lower premium overall but people with health problems would be charged more.
Also Known As: selling insurance across state lines
Examples: Joan is a healthy lady but still wanted health insurance just in case she had an emergency. The state she lives in highly regulates insurance and therefore the insurance companies are required by the state to offer extensive benefits. These extensive benefits raised the price of the health insurance. Joan just wants a basic policy to cover her if she has a major expense. She found out that if she was able to purchase insurance across state lines that she could buy a policy from another state that did not regulate insurance and that basic policy would carry much less of a premium than the state that she lives in.
