Name:   GoneFishin - Subject:   How about these ideas Date:   12/1/2014 8:46:02 PM (updated 12/1/2014 8:47:58 PM)

I totally support competition. As to the lengthy argument about the Commerce clause, it is too involved for me to understand and comment. The issue is much more basic than the Constitution.

 First, under ACA all individual and small group(2-50) cannot have a loss ratio that exceeds 80%. If is lower than 80%, the Insured receives a refund for the difference. For a  large group plan(51+), the minimum loss ratio is 85%. That keeps the rates at a level that is competitive since the company has to return any excess profits. This is a major change from pre ACA.

Let's assume you are Mr Martini, CEO and President of Martini Health Insurers headquartered in Reno Nevada. You have a company that is licensed to write insurance in NV. You want to expand to other states. So, you become licensed as a health insurer in GA and FL. and file a policy and rates.

At this point, you have no network of Doctors willing to accept your coverage or any agreements with any hospitals outside of NV. You need a staff to develop a competitive network. You maybe a big deal in NV but you are no one in GA and FL. Hospitals will not give you the same rates as Blue Cross, CIGNA, Aetna, etc. Now, you have a problem…how can you be competitive if you will have to pay the hospitals more for each claim? Will you have a large enough network of Doctors to attract a large customer base to spread the risk?

So, any licensed health insurance  Company can currently sell policies in all states if that is their business plan. 

As I understand, the GOP plan would allow you as a NV company to file a policy in NV and sell it in all states. As CEO and President, you want and support that effort. The GOP implements it and now you are free to expand your business to all 50 states. You must first  establish a nationwide network of Doctors and negotiate a competitive contract with hospitals in all your new markets. This is no small task for a  small company. That is why the number of companies writing health insurance nationwide is limited to large carriers. Smaller companies compete well in their own limited market. 

If one of your insureds in GA has a claim problem, they will contact the GA Dept of Insurance. Sorry, but we do not have any policy on file …..you will have to contact Dept of Ins NV. Now, you have to deal with the Dept of Insurance in Nevada.

Companies that want to sell nationwide can do it now.They just don't want to set up the necessary networks. And, they have no leverage to negotiate with Docs and hospitals that will enable them to be competitive with the big Companies.

Can it work? It works with Medicare Supplement policies and Medicare D(Drug Coverage). But these programs are controlled by the FEDs. Medicare supplement only pays it Medicare pays. Now, if you are willing to accept the FEDs replacing the state Departments of  Insurance and setting the reimbursement rates for hospitals on an equal basis for all companies as they do with Medicare,  filing policies with the FEDs rather than states, and requiring insurance Companies to be licensed by the FEDs, than Martini Health can simply do the Federal filings and enter the market assuming the Doctors and hospitals want to do business with you.

The argument that you can move and take your auto with you is not quite that easy. You have to move to a state where the carrier is licensed to sell auto and to a place where they want to write it. Moving from the suburbs to inner city may not allow you to continue with their coverage. As to Homeowners, moving to Florida from Georgia is no guarantee you can keep your carrier. Insurance Companies  sell policies nationwide because that is their business plan and they file in each state. They have to set up competitive arrangements with collision shops and local claim reps. The Companies selling nationwide are big companies. 

Martini Health could do health insurance nationwide by following a similar game plan and negotiate with Doctors and hospitals across the county. It is an expensive effort and that is what keeps many health companies from entering the market. It is not the licensing or the filings.