Interstate Insurance Sales Considered By Legislators

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A proposal to allow Georgia residents to buy individual insurance plans across state lines could give residents cheaper options for coverage, but consumer protections would be a necessary component, said a North Georgia insurance agent.

"It would be great to be able to do this because we all need more offerings," said Brenda Friar, an agent with Flegal Insurance in Rossville. "Then again, you’d have to make sure there’s protection for the consumer. … If somebody from Georgia buys from Texas, who gets to regulate it?"

Gov. Sonny Perdue announced the reform proposal last week at a Georgia Chamber of Commerce event, but the office has not yet introduced a bill to the state Legislature.

With national health care reform poised to mandate that everyone purchase health insurance, affordability of plans is even more critical, especially on the individual market, said Bert Brantley, spokesman for Gov. Perdue’s office.

"This is for the person who’s literally out there comparison shopping and matching up (a health plan) with what they need best," Mr. Brantley said. "It really will just give the person who’s shopping more options."

Georgia would be the first state to make this reform at the state level, said J.P. Wieske, director of state affairs for the Council for Affordable Health Insurance, which represents companies selling individual health insurance.

Under current law, consumers only can purchase individual plans that have been approved for sale in Georgia and also abide by the state mandates on which kinds of treatments and services must be covered, according to the governor’s

The proposal would allow individuals to buy a plan that has been approved in another state. Consumers could save money by choosing a plan sold in a state that has fewer coverage requirements and thus could offer cheaper plans, Mr. Brantley said.

Insurance companies also would face greater competition from out-of-state plans, which could drive down premiums, he said.

In the U.S. House health reform bill, Republicans tried to include a provision that would have allowed individual plans to be sold across state lines nationwide. The provision was rejected. The overhaul bills passed by the House and Senate offered similar provisions with added regulations, though critics say those consumer protections still don’t go far enough.

"The idea is very seductive, but the details are very bad for consumers," said Jerry Flanagan, health policy director for Consumer Watchdog. "Insurance companies are pushing these plans to essentially deregulate state regulation of health insurance."

Those regulations are needed to ensure that coverage for vital services, such as chemotherapy, are available to consumers, he said.

Some are concerned that, if given this option, consumers would seek out the cheapest plan they can find and end up with inadequate coverage.

"There’s just so many details in insurance and so many exclusions and exceptions," Ms. Friar said. "It’s so typical that you don’t know what you got until you have a claim and you realize, ‘Oh, that wasn’t covered.’"

The governor’s office still is hashing out details about what consumer protections would be in place under the proposed change, Mr. Brantley said.

Another issue would be the carriers’ provider network in Georgia. Most consumers likely would choose a plan from a national company that already has a provider in Georgia, he said, rather than an insurer that doesn’t operate at all in the state.

"They could stay with that same company and maybe pick a plan (offered by that company in another state) that meets their needs better," he said.

But nothing would stop a consumer from buying a plan from a company that does not already operate in Georgia, Mr. Brantley said. The individual probably would have to pay the full cost of care up front, then file a claim personally with the insurer, he said.

The outcome for insurance reform at the national level still is uncertain. If federal health reform does away with state-level insurance departments and allows everyone to purchase insurance in an open market, how states would cope with the loss of revenue from insurance premium taxes is an issue, said Russ Blakely, an employee benefits consultant in Chattanooga.

"(In the individual market), for every dollar spent on premiums, 2.5 cents of that dollar is going to the state insurance department," he said. "A lot of that revenue is being used to fund other state programs."

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