Note: The blogs on this website are intended to be apolitical and as much as possible I will stick to that objective
Over this past weekend, President Trump’s staff talked about a possible Executive Order which may or may not be issued this week which would allow two questionable insurance practices, ostensibly aimed at making insurance more affordable. Both are stupid (Okay, this wasn’t apolitical).
1. Interstate sale of insurance; In a nutshell, an insurance company in Arkansas a state with much weaker insurance protections than NYS, RI or CT could enter those markets and sell their Razorback insurance products to companies for what the Administration thinks will be much cheaper prices than the mandate-laden policies of those three states. The flaw in this is obvious. First, mandates aren’t the main cause of high insurance prices, it’s the cost of medical care. So when the Arkansas company tries to negotiate a discount with a large medical provider such as Hartford Healthcare or Albany Medical Center, they have no policyholders and thus no clout to get anything other than a prompt pay discount. They have no ability to drive lower premiums if they’re paying 40% more than the established and licensed carriers. Interstate sale of insurance has been allowed in Georgia for 6 years now and the number of out of state carriers selling in Georgia has remained the same;
2. Association Health Plans; Again, in a nutshell, this would allow groups of individuals or small businesses to band together to get lower prices for health insurance. Those could be sponsored by trade associations, professional groups or other community organizations. Senator Rand Paul underscored what has been my contention for the past 30 years; that no one knows as little about financing health care than physicians. I’ll let his quote speak for itself. If you know anything about group insurance principles, you’ll understand what I’m saying. “Association plans would let plumbers, carpenters, welders or any type of small business band together to get group health insurance,” Mr. Paul said recently, describing his vision. “Literally any group — your church, the National Rifle Association, the American Civil Liberties Union — any group of people who choose to do so could offer cheaper, better health insurance.”
It remains to be seen if an Executive Order can override State Insurance laws. ERISA specifically reserves regulation of insurance to the States so this whole EO may be a lot of nothing.