News & Politics

The Dangers of McCain's Plan to Sell Health Insurance Across State Lines

A recent study shows that treating health insurance like an item on eBay would reduce costs for the healthy and raise them for everyone else.


In the era of eBay, you can buy just about anything from just about anywhere. Senator McCain and other lawmakers have proposed putting health insurance on a similar nationwide auctioning block by allowing consumers to purchase health insurance from any other state. This may sound harmless, but the effects of buying and selling health insurance across state lines would be far more dangerous than, say, your latest treasure found on eBay.   




Those who support purchasing health insurance from any state argue that it will invigorate market competition and drive down premiums. However, a recent study by the New America Foundation showed that:



The primary source of "savings" under [this kind of proposal] is not more competition or more efficient insurers. The savings comes from separating the healthy from the sick.... [It] would lower premiums for the healthiest Americans, but it would raise premiums and reduce coverage options for everyone else.


Indeed, permitting the sale of health insurance across state lines would undermine all existing consumer protections, which are determined state by state. As Families USA revealed, state consumer protections-particularly in the individual health insurance market-vary dramatically from state to state. Some states have made tremendous strides in creating accessible, functional insurance markets for individuals and small businesses. As the New America Foundation points out, Senator McCain's proposal would eliminate the best protections and bring all states down to the lowest common denominator:



[Selling health insurance across state lines] would have the ultimate effect of standardizing state regulation to the least restrictive level, thus de facto de-regulating individual insurance markets. Politically, this allows the de-regulatory preferences of one state to negate the regulatory preferences of the 49 other states, without either a national or state-specific vote.

This proposal has far more insidious implications for consumers than its proponents will admit. Crossing state lines to find a great deal on a limited edition autographed book is one thing. Crossing state lines to find health insurance just crosses the line.