Interstate health insurance concerns


Minnesota may have a better idea when it comes to health care coverage than the feds. 

A pair of federal bills (Section 309 of H.R.3962 and Section 1333 of H.R.3590) working their way through Congress include provisions that would permit health insurance to be sold across state lines. Currently, health insurance is sold and regulated on a state-by-state basis.

If approved, insurers would be permitted to sell health coverage in a state even if the coverage does not comply with that state’s laws, provided the coverage complies with another state’s laws.

Several people told a joint hearing of the House Commerce and Labor Committee and the House Health and Human Services Finance Division that may not be such a good idea here. No action was taken. (Watch the meeting.)

“Why would we want our current mandates to possibly be slighted?” said Sue Abderholden, executive director of NAMI Minnesota. As an example, she said mental health services might not be required in another state, unlike in Minnesota, and that could lead to further costs down the road.

Michele Kimball, senior state director of AARP Minnesota, urged the state to be cautious “in opening our doors” to insurance companies not licensed in Minnesota and not under control of the Commerce Department.

“If interstate sales are allowed, Minnesota state agencies and courts will be powerless to protect consumers from an out-of-state insurance company that goes bankrupt or refuses to pay for life-or-death surgery. Additionally, an out-of-state insurance company could use high-pressure sales tactics to peddle insurance that sounds like a good deal, but which offers little coverage and poor value,” she said. “Those who find out that they do not have the coverage they thought they had could end up relying on Minnesota’s Medicaid program or uncompensated care to get the medical care they need.”

Proponents say the federal proposals create more competition, which should lead to lower costs and greater consumer choice. However, Gov. Tim Pawlenty is in the camp that the competition should be created by the private sector.

Deputy Commerce Commissioner Manny Munson-Regala said the governor is proposing that residents be permitted to purchase plans sold in other states if it meets four criteria, including the company must agree to abide by Minnesota’s claims practices and consumer protection laws.

He also said the governor is also proposing the state help establish an interstate health insurance compact to let states “join and share common regulatory standards to facilitate the purchase of health insurance across state lines.” It would be modeled after a compact that has made it easier to purchase life insurance.