NEW YORK TIMES: …The trouble is that varying or numerous state regulations aren’t the main reason insurance markets tend to be uncompetitive. Selling insurance in a new region or state takes more than just getting a license and including all the locally required benefits. It also involves setting up favorable contracts with doctors and hospitals so that customers will be able to get access to health care. Establishing those networks of health care providers can be hard for new market entrants.
“The barriers to entry are not truly regulatory, they are financial and they are network,” said Sabrina Corlette, the director of the Georgetown University Health Policy Institute.
In 2012, Ms. Corlette and co-authors completed a study of a number of states that passed laws to allow out-of-state insurance sales. Not a single out-of-state insurer had taken them up on the offer. As Ms. Corlette’s paper highlighted, there is no federal impediment to across-state-lines arrangements. The main difficulty is that most states want to regulate local products themselves. The Affordable Care Act actually has a few provisions to encourage more regional and national sales of insurance, but they have not proved popular…. (more)
EDITOR: Would we buy a car at a discount price if there were only a few, distant, and not highly qualified service facilities within the state?
I agree that setting up a medical network might not be easy, however, insurance companies have negotiated the provider reimbursements so low in many cases, that medical providers would be very open to new insurance companies.
I have a family member in the medical accounting field and their group has dropped a few local insurance because their reimbursements are too low, their paperwork is too onerous, or they are slow payers.
Better analogy still: why can’t we go across a state line and find a car that is actually much cheaper or is it like all the markets in America, rigged, fixed and gamed by the supply side? For all of the so called competition in American markets I am struck by the complete lack of price differentials on most large ticket items.
“Better analogy still: why can’t we go across a state line and find a car that is actually much cheaper or is it like all the markets in America, rigged, fixed and gamed by the supply side? For all of the so called competition in American markets I am struck by the complete lack of price differentials on most large ticket items.”
That’s the truth – those who praise capitalism the most seem to be the first to take advantage of closing markets restricting regulations!