In Idaho, conservatives may soon have a chance to prove their theory that competition in the health insurance sector will drive down premiums.
A bill to permit out-of-state insurance companies to sell insurance in Idaho garnered bipartisan support as it passed the House on a 59-6 vote. Only Democrats, including House Minority Leader John Rusche, D-Lewiston, opposed the bill.
The legislation now heads to the Idaho Senate for consideration.
The bill may face tougher scrutiny when it arrives on the other side of the Capitol rotunda. Sen. Dean Cameron, R-Rupert, an insurance agent by trade, has said he wants to ensure proper protections are contained in any legislation that would allow outside health carriers into the Idaho market. He has not clarified what would constitute proper protections.
Cameron has even hinted he might bring his own legislation to allow the practice, but with about two weeks left in the legislative session, that seems unlikely.
The measure is being billed by its sponsor, Rep. Julie Ellsworth, R-Boise, as a way to bring down costs. Through the legislation, health insurance carriers outside Idaho would be able to sell their services in the Gem State provided they are licensed in another state. External health carriers would be required to settle any litigation or disputes over prices or policies in Idaho courts or through a mediation process within the state.
Companies would also be forced to pay the Idaho Department of Insurance 1 percent of their premium costs for oversight and regulation. The department would then monitor a company’s activities and ensure they keep their license to do business in other states.
Health carriers would also need to pay into a state fund that helps insure a pool of indigent residents who don’t qualify for Medicaid or other government welfare programs.
Conservative and Libertarian types have been crying out for a bill like this nationally and in states across the country for years. Michael Cannon of the Cato Institute, Washington, D.C., a free market think tank, suggested in a 2009 policy brief that easing purchase restrictions would do more to help the uninsured than any government program.
“One study estimated that that move alone could cover 17 million uninsured Americans without costing taxpayers a dime,” Cannon wrote in the piece.
In a separate 2009 piece, Cannon explains exactly how the market would end the out-of-control increases in health insurance premiums.
“Let the workers control those earnings and choose secure health plans, and we will ruthlessly drive from the market insurers who overcharge us or shirk on their commitments to care for the sick,” he wrote.
But critics of the idea, including the Washington Post’s Ezra Klein, suggest that oversight of the out-of-state plans wouldn’t be sufficient and that coverage would be sketchy at best.
“That is to say, the legislation would not change the number of insured Americans or save much money, but it would make insurance more expensive for the sick and cheaper for the healthy, and lead to more healthy people with insurance and fewer sick people with insurance,” Klein wrote in 2010. “It's a great proposal if you don't ever plan to be sick, and if you don't mind finding out that your insurer doesn't cover your illness.”