CMS Seeks Comment on Purchasing Health Insurance Across State Lines

March 07, 2019 - CMS is soliciting public comments on strategies that would allow enrollees to purchase health insurance across state lines in an effort to increase competition and improve affordability for consumers.

The request for information (RFI) follows a 2017 executive order directing CMS to explore cross-border insurance options, “consistent with law,” that would tamp down premiums and offer more options for consumers to choose quality coverage.

“Americans are in desperate need of more affordable health insurance options,” said CMS Administrator Seema Verma.  “Eliminating the barriers to selling health insurance coverage across state lines could help provide access to a more competitive and affordable health insurance market.”

“We are looking for information and ideas from the public on how to create a more dynamic health insurance market with more insurers participating and competing to meet the needs of the American people just like we see in markets for so many other products and services that enhance our daily lives.”

In the RFI, CMS notes that there is no specific law prohibiting the sale of products across multiple states.  However, the McCarran-Ferguson Act of 1945 establishes states as the arbiters of insurance regulation.  Federal law may not supersede state regulation, the Act says, unless the federal law specifically pertains to the business of insurance.

“While several mechanisms to facilitate the sale of individual health insurance coverage across state lines exist, such as Interstate Health Compacts enacted through state legislation and the allowance of the sale of insurance from out-of-state insurers by a state, this RFI primarily explores options related to Health Care Choice Compacts related to section 1333 of the Patient Protection and Affordable Care Act (PPACA),” the RFI says.

Section 1333 allows health insurance issuers to engage in multi-state compacts and sell individual qualified health plan (QHP) products in any state included in the agreement.  However, the ACA makes no mention of selling group health insurance plans in the same manner, and no state has specifically passed laws allowing insurers to do so.

A few states, including Oklahoma, Georgia, Maine, and Wyoming, have taken certain steps towards allowing approved products in other states to be offered for sale in their own territories, but have taken no actions to implement the new strategies.  Other state governments are studying the feasibility of multi-state products, but have also made no concrete motions towards putting the idea into action.

In order to develop a more comprehensive strategy for expanding the sale of insurance products across state borders, CMS is asking the public to weigh in about the advantages and disadvantages of multi-state products.

Questions posed by the agency include:

• What actions could the federal government take to facilitate the sale of individual health insurance coverage across state lines?
• Why have states, including those that have passed legislation, not taken advantage of the opportunity to develop Interstate Health Compacts?
• Should HHS promote the sale of QHPs through Health Care Choice Compacts across state lines? How would this impact access to QHPs for consumers?
• Would selling short-term insurance and association health plans (AHPs) across state lines make the proposition of multi-state sales more attractive for insurers and state governments?
• How difficult is it for smaller and regional health plans to develop multi-state networks?
• What new consumer protections would be required to ensure that beneficiaries receive adequate coverage? How would multi-state products impact consumer groups, such as those with pre-existing conditions, the uninsured, and high-risk individuals?
• What impact would multi-state sales have on the consolidation of insurance companies?

“The Administration recognizes and strongly supports the fundamental role states play in regulating insurance. Providing states with flexibility to address the unique needs of their health insurance markets is a key component of achieving the goals stated in the Executive Order,” CMS said.

“This RFI is not intended to inform policy which will preempt state law or otherwise impede the role states play as the primary regulators of insurance.”

Public comments on the topic are due on May 6, 2019.  Information on how to contribute a comment is available within the RFI document located here.