For Rhode Island, Interstate Health Insurance Sales Didn't Pan Out

Jan 31, 2017
Originally published on January 31, 2017 8:45 pm

Tuesday is the last day of open enrollment for health coverage for 2017 under the Affordable Care Act. And while Republicans in Congress are working to repeal the law, it's not at all clear what might replace it.

During the campaign, President Trump suggested a nationwide insurance market that would allow insurance plans to be sold across state lines.

The idea has been kicking around for years, and some states have tried it, including Rhode Island, where it didn't work too well.

All Things Considered's Audie Cornish talked to Christopher Koller who was the Rhode Island's insurance commissioner when this option was offered.


On the roadblocks of allowing out-of-state health insurance options

It's very hard to have interstate insurance. It means that a state has to accept the rules of another regulator. That means if a Rhode Island insurer was licensed in Massachusetts, we have to say that whatever they do in Massachusetts is good for us here in Rhode Island. It also requires significant work to coordinate rules and regulations. Insurance regulators are reluctant to take on this task.

Let's say Rhode Island didn't allow limited benefit health plans. ... If we were to allow insurance to come in from a state that allowed those plans, and they sold them in Rhode Island, you'd have insurers offering policies that were against the laws and policies set forth by Rhode Island legislature. ... And if insurers are going to sell across state lines, you'll see more variation among states which makes it harder to coordinate and for insurers to operate across state lines.

On how health insurance compares to other lines of insurance

It's not [comparable]. There's a big difference between a hospital and an auto body guy repairing your car. We have a lot more auto body guys than we have hospitals. We don't compel auto body makers to take care of our car if we can't pay for it, but we compel hospitals to treat people if they can't afford to pay for it. We look at health care very differently from auto insurance.

On why out-of-state health insurance can't compete with local

In Rhode Island we have one hospital system that has 80 percent of births in the state. [Insurers] need that in [their] network to be competitive. And I can tell you that if a national insurer walked into that hospital, and said, 'Will you contract with us?' the hospital would have no reason to give the insurer any discount compared to local established health plans have already. That national insurer can't offer a competitive product.

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ARI SHAPIRO, HOST:

By midnight today, open enrollment for Obamacare comes to a close. President Trump has already issued an executive order aimed at curbing federal rules of the Affordable Care Act. It's not clear yet what that means. Meanwhile, congressional Republicans know they will repeal it but not what they will replace it with. We want to take a closer look at some of the ideas floating out there as potential pillars of an Obamacare replacement. One is a national insurance market.

(SOUNDBITE OF TV SHOW, "CHARLIE ROSE")

PAUL RYAN: We have a lizard selling us car insurance on GEICO. We have Flo selling us home and auto insurance.

CHARLIE ROSE: (Laughter).

RYAN: Why can't we have a vibrant and competitive marketplace like that for health insurance?

AUDIE CORNISH, HOST:

That's House Speaker Paul Ryan on public TV's "Charlie Rose" show. Now, some states already do have markets that reach across state lines - Georgia, Maine, Wyoming. And Rhode Island looked into it. But Christopher Koller, the man who led that effort as the state's health insurance commissioner, doesn't think comparing health and car insurance is apt.

CHRISTOPHER KOLLER: No, no, it's not. There's a big difference between a hospital who is providing you healthcare services and an auto body guy who's repairing your car.

CORNISH: Beyond the obvious (laughter), what is it?

KOLLER: Well, one, we have a lot more auto body guys out there in a market than we have hospitals. So in Rhode Island, we have one hospital system that has 80 percent of the births in the state. You absolutely have to have that hospital in your network if you want to be competitive. And I can tell you. The hospital has no reason to give that insurer any kind of discount comparable to what the local health plans who are already established have. So that national insurer cannot offer a competitively priced product.

CORNISH: What about the states themselves because I noticed that state insurance commissioners seem to be against this as well. We've seen some speak out nationally. And what's the reluctance there?

KOLLER: So to have interstate insurance means that a state has to accept the rules of another regulator. That means that, in my case in Rhode Island, if an insurer was licensed in Massachusetts, we would have to say, OK, whatever you do in Massachusetts is good enough for us in Rhode Island. Obviously there are turf issues associated with that, but that also requires just significant work to coordinate the rules and the regulations.

And then ultimately, that would mean that when a consumer calls us with a complaint, we have to say, sorry, we can't help you out. Go call Connecticut. Go call Massachusetts. Go call Georgia. That doesn't feel like we are fulfilling our obligation for consumer protection.

CORNISH: This also gets at a criticism we hear most consistently from Democrats and consumer advocates, which is that the state that has the least amount of rules and regulations for these insurers would just basically draw all of them there (laughter), right? And then the insurers would start offering skimpy plans. When Rhode Island researched this, was that a concern?

KOLLER: Certainly. Let's say, for instance, we in Rhode Island did not allow limited benefit health plans, health plans with annual and lifetime limits. Well, if we were to allow insurers to come in from a state that did allow those limited benefit plans and they were selling those plans in Rhode Island, one, you would create confusion. And two, you would have insurers offering policies that were against the laws. So that race to the bottom is a real fear.

CORNISH: Now, obviously people are still interested in this idea on Capitol Hill. Do you think that they think things will be different if it's national?

KOLLER: No. Look; we don't compel auto body makers to take care of our car if we can't pay for it. But we compel hospitals to treat people if they can't afford to pay for it. We look at health care very differently from auto insurance.

CORNISH: Christopher Koller is the former health insurance commissioner for the state of Rhode Island. Thank you for explaining it to us.

KOLLER: Sure, Audie. Transcript provided by NPR, Copyright NPR.