Whether health insurance should be sold across state lines is a highly debatable topic. One theory points to benefits, showing that more consumer choices allow the ability to potentially lower health insurance costs, while Brokers can expand their reach and grow their business. On the other hand, the idea of developing a more national market for health insurance presents financial and administrative challenges for Carriers. Below, we took an in-depth look at what it would mean to sell health insurance across state lines.
Can You Sell Health Insurance Across State Lines?
There is no clear “yes” or “no” answer here. Each state regulates health insurance, with laws varying based on business regulations, employer incentives and consumer protections. For example, some states may have requirements mandating coverage of certain benefits, such as chiropractic care or mammograms, while other states choose to take a more hands-off approach to health insurance. Until March 2010, there was no federal law that either allowed for or prohibited cross-border selling and purchasing of health insurance. The Section 1333 provision of the Patient Protection and Affordable Care Act (ACA), which took full effect January 2016, permits states to form health care choice inter-state compacts to allow insurers to sell policies in any state participating in the compact. However, there has been little adoption of the provision thus far. To date, nine states have enacted Interstate Health Compacts:
• Kansas • Missouri • Texas • Oklahoma • Indiana • Utah • Alabama • Georgia • South Carolina
According to a report by the Georgetown University Health Policy Institute, no Carrier has yet to capitalize on any out-of-state sales.
Challenges of Selling Health Insurance Across State Lines
As previously alluded to, selling health insurance across state lines can be challenging for Carriers in particular. According to the American Academy of Actuaries, the primary barrier for a Carrier to enter a new market is not the state’s regulations, but the cost of building up a provider network at discounted prices. The New York Times echoes these concerns that “selling insurance in a new region or state takes more than just getting a license and including all the locally required benefits. It also involves setting up favorable contracts with doctors and hospitals so that customers will be able to get access to health care. Establishing those networks of health care providers can be challenging for new market entrants.”
Benefits of Selling Health Insurance Across State Lines
For Brokers and their Groups, though, there are benefits of selling health insurance across state lines: Lower Health Insurance Costs Equivalent insurance coverage can cost more than twice as much in some states than others. For example, someone in Wyoming might pay an $881 monthly premium for health insurance, while someone in the neighboring state of Colorado might pay $358 per month. However, by being able to cross state lines, you can offer more competitive pricing to your Groups to help lower the cost of health insurance. More Health Insurance Options A recent study by healthcare consulting firm Avalere found that 21 percent of insurance consumers are able to buy insurance only from a single Carrier. In an age where customers have come to expect personalized experiences, being able to offer multiple options allows your Groups to choose the best health plan for them. This, in return, can help Brokers gain a more competitive advantage. Expand Your Reach to Grow Your Business Of course, Brokers can sell insurance in multiple states—you just have to be licensed in each state where you sell insurance. But under the existing system, Brokers are limited to only selling health insurance to customers who live in that state. However, if federal laws change, Brokers will need to have the right tools in place to quickly quote, compare and sell insurance across state lines. Leveraging a comprehensive software with real-time quoting capabilities can help Brokers streamline processes to make selling health insurance easy. FormFire’s Quote Engine tool allows Brokers to gather quotes from participating Carriers using basic demographic info. From there, Brokers can generate proposals instantly and provide a shopping-like experience to Groups to easily compare health plans side-by-side. Contact FormFire today to learn more or request a free demo.