In yesterday’s Power Point presentation, Mitt Romney argued that each state should have the right to develop its own health care plan and promised to “restore to the states the responsibility and the resources to care for their own poor, their own uninsured, and their own chronically ill.” “States of course will experiment and learn from one another and they’ll have flexibility to deal with the uninsured in the way they think is best,” he said.
But he also introduced the idea of allowing insurers to sell policies across state line, a concept that would allow companies to circumvent state consumer protections and regulations and essentially undermine state powers. As Aaron Carroll explains:
His Massachusetts plan would fail completely if residents of that state could purchase plans from other states, according to other regulations. If New York wants to set community ratings (as should be their right by Gov. Romney’s former argument), then allowing healthy people to buy policies from Texas where no such regulations exist (as should be their right by Gov. Romney’s latter argument), causes New York to fail.
Letting people buy policies across state lines means that states will be regulated by other states – likely the ones with the least restrictions – instead of the federal government. But they won’t be “laboratories” or have real power.
In other words, it’s the same thing that happened after a pair of Supreme Court decisions deregulated the banking industry: credit card companies relocated to states with no interest rate caps and charged what they wanted to borrowers in states with interest rate limits. That’s why all of your credit cards are from Delaware or South Dakota and why companies have used pricing practices that local laws prohibit.