(Sean Whaley/Nevada News Bureau) – With federally mandated health insurance now the law of the land barring a successful legal challenge, some state lawmakers say it is more urgent than ever to create competition among insurance providers by allowing Nevada residents to buy polices from out of state companies.
Assemblymen Ty Cobb, R-Reno, and Don Gustavson, R-Sparks, also say it is time to reduce the many mandated coverages required for an insurance company to offer a policy in Nevada to further lower the cost of premiums.
Other states, including Arizona and Georgia, have seen bills this year to allow for the purchase of policies from outside the state. The idea has been championed for years at the federal level by Rep. John Shadegg, R-AZ.
Nevadans now can only buy health insurance from companies licensed to do business in Nevada by the state Insurance Commissioner. While 723 companies are licensed to sell insurance in the state, suggesting that there is already competition, the Division of Insurance reports that many of the companies have limited offerings or may not currently be offering policies at all.
“In reality, only a handful (about 15) of insurers have a ‘health policy’ that you could purchase to cover doctor visits, hospital stays, surgeries, etc.,” said Maria Dal Pan Dias, public information officer for the agency.
“We should open up health care insurance to competition across state lines,” Gustavson said. “People have to be given choices that are affordable.”
Gustavson, who is running for an open state Senate seat, has also opposed adding mandated coverages that drive up the cost of a health insurance plan. People should be able to select policies based on their own health care needs, he said.
Cobb agrees, saying competition would lower the cost of buying health care insurance.
“We also need portability and tort reform,” he said. “Instead of true reform we got a government takeover that will result in a massive increase in the size of government. It is the opposite of what should have been done.”
Cobb, who is also running for an open state Senate seat, said his Assembly Bill 346 introduced in the 2009 session would have repealed a lot of insurance coverage mandates to allow for basic, less costly policies to be offered to residents.
Nevada requires all health insurance plans to provide coverage for medical services including alcoholism, cervical cancer/HPV screening, colorectal cancer screening, home health care, hospice care and several others.
“It would have allowed people, especially younger people just starting out, to buy basic health care coverage,” he said. “It would have allowed greater choice in what people wanted in their coverage.”
Cobb’s bill never received a hearing in the Democrat-controlled Assembly.
Las Vegas attorney Jim Wadhams, a lobbyist at the Legislature who represents several businesses, including the health insurer Anthem Blue Cross and Blue Shield, said he believes it is unlikely the Legislature will move to allow interstate competition.
The long-term policy of the state has been to mandate that certain coverages be included in any health insurance policy sold in Nevada, and Wadhams said he does not believe the Legislature would choose to move away from that policy by allowing residents to buy out-of-state policies with lesser coverage.
Wadhams said those mandates have made Nevada’s health insurance coverage among the richest, with the most generous benefits, of all the states.
Grace-Marie Turner, president of the Galen Institute, a non-profit research organization focused on health policy, said she would welcome efforts by the states to go out on their own to provide for increased competition by health insurance companies.
She cited a study by the American Enterprise Institute that found that if individuals were allowed to purchase health policies in nearby states, up to 12 million more people would have health insurance at no cost to the government.
“It would be a great idea if there was true competition,” Turner said. “It’s not easy, but you can make it work. You don’t have to go to the lowest common denominator.”
States could ensure there were protections for residents while still allowing them to make their own choices for coverage without a mandate from the federal government, she said.
“I would love to see states do this, to take the initiative,” Turner said. “If states can do an end run around ObamaCare, then more power to them.”
Not everyone agrees that providing for such competition would actually lower health care costs, however.
The National Association of Insurance Commissioners, in a document called, “Interstate Health Insurance Sales: Myth vs. Reality,” said the real result would be lower premiums only for the healthy. Everyone else “would face steep premium hikes if they can find coverage at all.”
The association also disputes the suggestion that mandated benefits are the cause of more expensive health insurance coverage.
“Mandated benefits add, at most, 5 percent to the cost of a policy,” the association said. “Interstate sales would allow some insurers to cherry-pick the best customers by avoiding consumer protections that require them to cover individuals with preexisting conditions and limit their ability to charge higher prices for older, sicker customers.”
In states with robust consumer protections, insurers could reap huge profits by skirting these rules, the association said.
UnitedHealthcare of Nevada, one of the largest health insurance providers in the state with approximately 691,000 members, including those covered under Medicaid and Medicare through state and federal government contracts, had no comment on the concept. The company is a licensed insurer at some level in every state, and is one of the largest health plans in the country.
The Georgia proposal, pushed by Gov. Sonny Perdue, has passed the House and is awaiting action in the Senate.
“This legislation will open up the individual insurance market and allows consumers to find the plan that best fits their needs,” Perdue said in a statement issued in February.
Janine Hansen, an Independent American Party candidate for Assembly District 33 in Elko, said the Nevada Legislature first needs to challenge the new federal health care law when it convenes next February as other state legislatures have already done. Then lawmakers need to have a discussion about how to lower the cost of health insurance, she said.
One idea is to create tax-free health savings accounts that individuals can pay into and then use the money for their health care needs in combination with a catastrophic-type policy, she said.
As to interstate health insurance purchases, Hansen said competition is usually a driving force in lowering costs, although she said she would have to learn more about the concept.
“Exploring ideas like competition is exactly what we need to do,” she said.