Fort Worth Health insurance in 2020 would benefit If There were no Networks

by PRC Agency PR

Health insurance in Fort Worth, Texas could benefit from one of the big ideas that has been circulating in legislative health care proposals which targets the ability to purchase health insurance across state lines. This proposal has come up time and time again. Following are the pros and cons of such a proposal:

This idea of purchasing health insurance across state lines encompasses the following: “Modify existing laws that inhibit the sale of health insurance across state lines in all 50 states. If it were legal for consumers to shop health coverage in more than one state, there would emerge a national marketplace. This would give consumers who purchase health care in certain cities, such as Fort Worth Health Insurance, more plan options to choose; thereby, increasing competition and driving prices down. The law would state, ‘As-long-as plan purchases comply with state requirements, any health insurance vendor could offer insurance in any state.’ Ultimately, by allowing full competition in this market, insurance costs will fall and consumer satisfaction will rise”.

The first issue that prohibits purchasing health insurance across state lines is the “Provider Networks”. Health insurance companies’ policies must contract with enough health care providers to meet the state’s network adequacy requirements. Health insurance companies have better negotiating leverage with health care providers when they have large numbers of policyholders. A company that can’t negotiate good discounts won’t be able to price its products competitively. If a carrier has never operated in more than one state, that carrier has few to no policyholders in the new state; thereby, losing its pricing leverage. To mitigate this issue, existing carriers in that market could rent networks to other carriers not currently operating in that state. As an example, current carriers selling have health insurance agents selling in Fort Worth, would lease to emerging carriers entering this new market “network rental fees”. By doing so, this would eliminate new carrier discounts, which means new carriers cannot pass competitive rates to their policy holders. As a result, their policy prices would rise.

The second issue with selling health insurance across state lines is, “Adverse Selection”. Adverse selection is defined as, “The state with the most-lax regulations and least oversight will become a haven for insurance companies’ headquarters. These insurance companies would attract policy holders by reducing benefits which lower costs. The cost benefits are passed to the consumer, which would result in low premiums. As a result, insurance companies with lax regulations would receive a higher market share”.

Current licensing laws give states the authority over insurance companies’ activities in that state, even if it’s headquartered elsewhere. The disadvantage of adverse selection is, state insurance departments would lose direct oversight of companies selling policies in their state, which would erase their minimum standards of coverage.

The third issue with selling health insurance across state lines is, “Limited Adoption”. Limited adoption is defined as a limited number of states having approved laws to allow the sale of policies across state lines. Currently, Maine, Georgia, Kentucky and Wyoming have such laws. What is most telling about limited adoption is that insurers in the adjoining states haven’t lined up to take advantage of the opportunity to sell across state lines. A better solution to limited adoption may be “Interstate Compacts”. This idea allows several states with similar demographics, such as New Englanders, to collaborate and regulate health insurance companies under one uniform set of rules. This allows a streamlined process for companies to offer licensed products in each state. The current Affordable Care Act provisions allow for interstate compacts. This means states can sign agreements that allow for purchasing health insurance across state lines. Six states have done so; yet, there are currently no insurance companies taking advantage of this option.

A fourth issue and a more promising option could be to outlaw networks altogether? By eliminating networks, doctors need to be transparent with their pricing. At the same time, consumers could more easily seek coverage from out-of-state providers; thereby, creating more negotiations with doctors when health care services are needed. This idea ultimately could solve many issues involved with purchasing health insurance across state lines.

Insurance4Dallas, (I4D), helps insure all of Texas, Oklahoma, Arkansas, Arizona, Lo