Out-of-State Health Insurance
In New Hampshire, consumers here must purchase health insurance plans that are approved by New Hampshire regulators.
Each state has the right to regulate health insurance sold within its borders. (State regulation does not apply to self-funded health insurance offered by large employers and business associations across state lines.) State regulations include what treatments insurance must cover, how many hospitals must be in-network, how consumers can appeal insurance company decisions, and so on. There are also federal regulations all plans must follow.
Some policymakers believe that insurance companies should be able to market their individual plans across state lines. Theoretically this would give consumers more choice.
A handful of states — including Maine — have passed laws allowing insurers licensed in other states to offer those plans in-state.
However, no insurers have chosen to sell their individual insurance plans across state lines. This may be partly due to the fact that insurers still have to privately negotiate with health care providers to establish in-state networks.
Impact of the Affordable Care Act
The federal Patient Protection and Affordable Care Act, commonly known as the ACA or “Obamacare,” added many federal regulations for insurance companies. For example, the ACA requires insurers to cover preexisting conditions and does not let insurers reject a customer based on health status. State-approved health insurance plans must follow these ACA rules, although states have the power to set stricter standards if they choose to.
The ACA also has a provision allowing states to set up “inter-state compacts.” These compacts would allow an insurer licensed in one state to sell insurance in other states in the compact. The federal government never finished making rules for the compacts, however, and no states tried to form a compact.
A new way forward: association health plans?
The Trump administration is proposing new rules for “association health plans” that arguably open the door to consumers purchasing health insurance across state lines. Sen. Andy Sanborn proposed a similar change at the state level in 2018 through SB 546.
Association health plans are created when many employers join together to purchase health insurance. For example, the National Restaurant Association offers health plans to its members. These cross-state associations are exempt from many state-level regulations as well as many ACA requirements.
Right now only larger employers can participate in association health plans. Some argue that association health plans should be open to smaller employers — including the self-employed and sole proprietors. That would allow more people to purchase health insurance not bound by in-state regulations.
The Trump proposal is still in progress, and may be open to legal challenges. The New Hampshire House sent SB 546 for more study.
"NH residents should be allowed to purchase health insurance policies approved in other states."
- From 2017 to 2018, premiums on New Hampshire’s online health insurance marketplace increased over 40%. Given these dramatic increases, New Hampshire needs to try something new to lower premiums – such as allowing residents to purchase health insurance policies approved in other states.
- Consumers can purchase all other forms of insurance – such as car insurance and life insurance – across state lines. There is no compelling reason why health insurance should be treated differently than other forms of insurance.
- Allowing insurers to spread their pool across state lines would share risk among a larger group of consumers, lowering premiums for all.
- The Affordable Care Act, also known as the ACA or “Obamacare,” establishes minimum standards for health insurance nationwide. For example, insurance plans generally need to cover ten essential health benefits, including emergency services and maternity care. These universal protections ensure that health plans licensed in other states are still safe and fair for New Hampshire consumers.
- New Hampshire law requires health insurance to cover products and services that some customers view as unnecessary, such as hearing aids and hair pieces for cancer patients. Since more benefits generally contribute to higher premiums, New Hampshire residents should be able to choose plans in other states that require fewer benefits.
- Allowing more insurers to sell policies in New Hampshire would increase choice for consumers and increase competition among insurers, motivating insurance companies to lower premiums.
"NH residents should not be allowed to purchase health insurance policies approved in other states."
- Under current New Hampshire law, if a consumer wants to make a complaint against his or her insurance company, the consumer goes to the New Hampshire Insurance Department. If an insurance company is never licensed by the New Hampshire Insurance Department, a New Hampshire consumer would not have a clear agency to advocate on his or her behalf.
- When the Legislature considered a bill to allow out-of-state insurance in New Hampshire in 2015, the House Commerce and Consumer Affairs Committee reported that the laws requiring certain coverage account for less than 5% of the variation in health insurance premiums in different states. Allowing consumers to purchase insurance from states with fewer legal mandates would therefore not save those consumers any significant amount of money.
- Health insurers must negotiate reimbursement rates with health care providers wherever they sell health insurance. Even if a health insurer is not licensed by the New Hampshire Insurance Department, they would have to negotiate reimbursement rates with New Hampshire providers. However, in order to negotiate lower rates, health insurers must represent a large number of potential customers for the health care provider. If a health insurer is not licensed in New Hampshire and has never sold to New Hampshire customers before, they would have a hard time convincing health care providers that a large number of patients will choose their insurance. This means out-of-state health insurance companies would have trouble negotiating low reimbursement rates. This would increase the cost of insurance sold by out-of-state companies in New Hampshire.
- No health insurer has chosen to sell individual plans in states that allow out-of-state insurance. This suggests that it is a waste of time and money for New Hampshire government to develop a process for out-of-state insurers to sell policies to New Hampshire residents.
- The insurance benefits required in New Hampshire law were adopted through the legislative process, which includes public hearings, vetting by state officials, and approval from legislators and the governor. This thorough process ensures that any required benefit is for the benefit of all New Hampshire residents. If any mandated benefits are unnecessary and driving up costs, then the Legislature should consider a bill to repeal that mandate – not a bill to eliminate state regulation of health insurance altogether.
- Supporters of health insurance from other states argue that the insurance could be cheaper for New Hampshire residents because it included less benefits. If that were true, healthy residents would be more likely to purchase that insurance, leaving less healthy residents to buy insurance licensed in-state. But without the contribution of healthier residents, that in-state health insurance would become costlier for the less healthy residents who need it most.