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Health Insurance: Why it is Not Sold Across State Lines

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One of the primary reasons identified for high health insurance premiums is lack of competition. Unlike life insurance, health insurance can't be sold across state lines. Why does such an obvious problem, with an obvious solution, still exist?

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This detailed solution explores why health insurance cannot be sold across state lines. APA references are included.

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High health insurance premiums exist in part due to the lack of a large pool of competitors in the marketplace. An open marketplace encourages competition among product and service providers: not only in pricing but also in services and quality. More competition results in lower costs for the consumer, and more options mean more affordability. Americans are not currently able to buy health insurance across state lines because states mandate items on insurance policies. The National Center for Policy Analysis reports, "in states where health insurance costs are the highest, a portion of the premiums paid is being used to cross-subsidize the premiums of high-risk individuals " (20smoney, 2012). The government has decided to subsidize some at the expense of all. Furthermore, mandates differ by state. Some states require coverage for acupuncture (11 states), massage therapy (4 states), osteopathy (24 states). The Wall Street Journal estimates that there are "1,800 or so such insurance "mandates" across the country, and the ...

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Sally Baldwin, Ed.D
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  • MSS, United States Sports Academy
  • Ed.D, Boise State University
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