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Idaho should lift ban on cross-state insurance sales

Idaho should lift ban on cross-state insurance sales

Wayne Hoffman
October 29, 2012
Wayne Hoffman
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October 29, 2012

This last legislative session, the House of Representatives passed a bill to change the law that bars out-of-state insurance companies from selling in Idaho and forbids Idahoans from buying insurance from companies in other states. The vote was substantial, 59-6.

But the measure was then sent to the Senate Commerce and Human Resources Committee, never to be heard from again. Not surprising, really. The Big Insurance companies, which had every reason in the world to oppose it in order to preserve their Idaho marketplace monopoly, never even showed up for the House hearing where the bill was considered; I figure they knew from the get-go that the fix was in well before the House’s successful floor vote.

I bring this issue up as the general election approaches because the Idaho Freedom Foundation asked Idaho legislative candidates to weigh in on this 1961 policy. Lost in a sea of other health care-related questions, such as whether to have a state health insurance exchange or expand Medicaid, this issue stands apart because it is a policy that Idaho lawmakers alone own—and can fix. And it is one that we found cuts easily across partisan lines.

Republican Gresham Bouma, who is running for state Senate in the Lewiston area, in his survey answer said, he favors eliminating this restrictive law: “Customers should be able to purchase coverage from any legitimate insurance company, and be free to choose what sort of treatments they would buy coverage for. Personal choice and responsibility need to be rewarded, which would occur in a free market in medical insurance.”

Todd Lakey, a Republican Senate candidate from Nampa, said he is undecided on the issue. “I generally support a free market environment so I am inclined to allow purchase across state lines. However, I need more information on why current limitations exist and the impacts of making a change,” Lakey said.

Lakey’s opponent, Democrat Melissa Sue Robinson, unequivocally supports repeal of the statute. “The cost of health insurance in Idaho is extremely high because of that antiquated law,” Robinson wrote.

Sen. John Goedde, R-Coeur d’Alene, said he would oppose the legislation. “Idaho has 740 companies licensed to do business in the state now. Adding companies may not increase competition and it certainly limits consumer protection.”

Goedde is in the insurance business. He carries sway with many of his peers, and could be in a position to lead the Senate Commerce and Human Resources Committee, where last year’s bill quietly died. I admire Goedde’s passionate championship of the cause of education reform in his role as Senate Education Chairman. So I hope to change his mind on this issue. Health care truly is an area in need of more reform, and that begins with the removal of the legislative barriers that are responsible for higher costs.

And really, Idahoans don’t have 740 companies to choose from in health insurance land; they largely have three: Blue Cross, Regence Blue and PacificSource. Moreover, if Goedde’s argument were applied to other industries, the state might legitimately ban people from buying books, cars, TVs, computers or any number of products from outside our borders—all in the name of sufficient competition, all in the name of consumer protection. But Idaho doesn’t do that. Why? Because health insurance is “different,” we’re told. Nonsense.

Other states—Maine, Georgia, Wyoming and Oklahoma—have removed the barriers to interstate insurance purchases.

I keep hearing all the time how conservative Idaho’s Legislature is, and how supportive of free markets our lawmakers are. In 2013, they’ll have a chance to prove it with the repeal of this peculiar and unnecessary law.

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