GOP pushes for cross-border health insurance purchases

Republicans are pushing to allow individuals and small groups to buy health insurance across state lines.

The idea is a core response to the Democrats' federal health care overhaul. States have had the power to regulate insurance within their borders for at least 140 years, but the GOP has introduced a bill that would allow residents to buy health insurance outside of their states.

Unless you work for a company that's self-insured, it's likely the state you live in regulates your health insurance.

States set rules that can vary from the amount of money an insurance company must hold in reserve to what kinds of treatment health insurance policies cover.

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Tom Miller of the conservative American Enterprise Institute says people should buy the kind of insurance they want, not what their state requires.

Allowing people to buy out-of-state policies would increase competition, potentially lower insurance premiums, and give consumers more choices, Miller said.

"If they want all these protections, want all these other rules, they can still buy that," he said. "But it might turn out that a lot of people would prefer something else if they could find a more affordable, more competitive product through someone selling from another state, regulated in a different manner, with some appropriate safeguards to prevent anything from going too far awry."

To that end Republicans introduced the so-called "Health Care Choice Act" in the U.S. House of Representatives last month. The bill would allow consumers to cross state lines in buying health insurance coverage.

An insurance company would pick a primary state, say Iowa, and agree to follow Iowa's insurance regulations. A Minnesotan could buy that insurance but would be covered by Iowa's rules.

The Council for Affordable Health Insurance cautions that more mandates don't necessarily translate into higher premium costs. Some mandates are inexpensive and don't cover many people. Others such as mental health coverage are more expensive and do cover more people.

Minnesota tends to be among the states with the highest number of mandates. The Council, for example, counted 64 in the state, compared with an average of 42 among the 50 states and Washington, D.C.

The Dayton administration opposes the GOP's bill, saying those mandates have a purpose.

"I think it's important that Minnesotans get the benefits and opportunities that we have in our laws," said Michael Rothman, Minnesota's new commerce commissioner.

He said Minnesota has enacted consumer protection laws for a reason -- to protect Minnesotans from unfair insurance practices. He worries that insurers will flock to lower-regulated states and end up lowering the standards for all health insurance.

"It's a race to the bottom then if you allow people to go across state lines," he said.

The trade group that represents Minnesota's health insurance plans also has concerns about the Republican proposal, and a version in the federal health care law as well.

Julie Brunner, executive director of the Minnesota Council of Health Plans said either way, Minnesota insurers want a level playing field. Allowing Minnesotans to buy insurance regulated by another state means there is no level playing field for Minnesota insurers, Brunner said.

"If you want to open the market to more competition from insurance companies then every company that sells in Minnesota has to meet the same requirements as every other company," she said.

The federal health care law has an option for states to allow consumers to buy insurance across state lines. The law requires individual states to set up Expedia-like health insurance comparison shopping sites by 2014. Under the health care law, states COULD band together if they want in regional compacts to sell insurance across the borders of the participating states.