Explaining Hillary Clinton’s Trip to the Health Policy Twilight Zone

The Democratic contender’s openness to allowing insurance sales across state lines isn’t as jarring as it seems.

Hillary Clinton participates in a round table discussion with Whitney Brothers management and employees April 20, 2015 in Keene, New Hampshire. 
National Journal
April 21, 2015, 10:09 a.m.

For a few minutes last week, Hillary Clinton sounded a little bit like, of all people, Ted Cruz.

The Democratic presidential front-runner was asked in Iowa about allowing health insurance to be sold across state lines, which is a hallmark of Republican alternatives to Obamacare. When Cruz proposed a health reform bill earlier this year, it did two things: repealed the Affordable Care Act and authorized insurance plans to be sold in multiple states. So you could excuse those who raised their eyebrows at Clinton’s comments.

“If we’re going to have a free-market system, we need a free market where we’ve got people competing on cost and quality, and that may be one thing we need to look at,” Clinton said in response to a question, NBC News reported.

Some conservatives took Clinton to task for seizing on a pillar of their health reform template.

“It is incoherent that candidate Clinton is picking up a McCain proposal from 2008 in hopes of injecting some competition into the hopelessly over-regulated, top-down Obamacare system she help to build,” Douglas Holtz-Eakin, president of the American Action Forum and a policy adviser to John McCain’s 2008 campaign, which proposed the policy, told The Washington Post.

It isn’t yet a set part of her agenda, of course. Clinton’s team has routinely said in these early days of her campaign that she won’t release detailed policy plans until at least next month. She’s on a “listening tour” for now. (Clinton’s campaign didn’t immediately respond to a request for comment.)

And even if Clinton takes the idea seriously, she wasn’t necessarily nodding toward conservative health reform ideas; she might have been simply picking up on one of the least publicized provisions of Obamacare, the foundation of her own party’s health policy agenda.

“Although sale of insurance across state lines is commonly a conservative proposal, a lot depends on how it is done,” Tim Jost, a health law professor at Washington and Lee University who supports the Affordable Care Act, said in an email. “Section 1333 of the ACA already permits sale across state lines as of 2016, but subject to state regulation and a number of conditions to preserve coverage.”

Mystery (potentially) solved.

Starting in 2016, Obamacare allows states (with federal approval) to enter into “health care choice compacts.” Under the compacts, health plans could be sold in multiple states, but they would still be subject to the regulations of the state where the insurer is located and must satisfy Obamacare’s rules for health coverage. The ACA even allows for nationwide health plans—as long as federal authorities approve, states authorize it, and the law’s coverage conditions are again observed.

The concern about allowing insurance sales across state lines has historically been that insurers would migrate to the states with the least burdensome regulations. The National Association of Insurance Commissioners, which represents state regulators, has warned about a “race to the bottom.” Obamacare could therefore reduce some of that risk, by making sure its rules still apply, and the law also requires the federal government to consult with NAIC in developing rules for the multistate compacts.

But even with the ACA’s allowances, multistate insurance sales have other issues to contend with. One hurdle repeatedly cited by nonpartisan experts is whether out-of-state insurers could build health care provider networks that would make them competitive in their new markets.

Some early experiments have added to that uncertainty. Georgia passed what was thought to be a landmark bill authorizing the practice in 2011; a year later, the state insurance commissioner said he was “absolutely dumbfounded” because no insurers had taken advantage of the opportunity. A few other states have passed similar laws in recent years, with the same results.

“None of the across state lines laws resulted in a single insurer entering a new market or the sale of a single new insurance product,” researchers with Georgetown University’s Center on Health Insurance Reforms wrote in 2012.

The next few years will tell whether insurers and states actually utilize Obamacare’s provision either. But its existence makes Clinton’s flirtation with the idea a little less jarring.

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