The hazards of selling insurance across state lines
Health insurance policies are currently regulated on a state-by-state basis. North Carolina can require that all policies sold within its borders meet certain basic coverage requirements. For many years free marketeers have pushed the idea of allowing insurance companies to sell policies across state lines without adhering to local regulations.
Long term care insurance is sold across state lines and policies are only subject to regulations imposed by the state where the insurance company is located. That has led to a great deal of pain and uncertainty for those seniors who bought policies from Conseco, a company based in Pennsylvania.
Conseco struck a deal with the insurance commissioner in Pennsylvania that allowed it to transfer a chunk of policies into an independent trust. The move will likely result in increased premiums and reduced benefits for policy holders across the country.
A Raleigh woman, Kitty Spillman, tells the reporter in the article that she is afraid benefits will run out for her 86-year-old mother. So what can North Carolina’s insurance commissioner do to help Ms. Spillman? Nothing. The policy is regulated by Pennsylvania’s commissioner.
If market fundamentalists have their way, health insurance will work in a similar fashion. Companies will move to the state with the least number of regulations and the most lenient insurance commissioner and start selling stripped down policies. And if the insurer wants to dump you — you’re on your own.
Although this proposal is dead in the short term with the election of Bev Perdue and Barack Obama, we should make sure it never rears its head again.