Testimony: Buying Health Insurance From Other States Will Not Make Coverage Affordable for the Uninsured

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Stacey Pogue /(512) 320-0222 x 117

September 12, 2012

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The center testified at an interim hearing of the Senate State Affairs Committee that allowing Texans to purchase health insurance from companies in other states will not make coverage affordable for the uninsured. Instead, cross-state health insurance sales would create a “race to the bottom,” letting insurance companies choose their regulator and skirt state consumer protection laws.

Texas law requires that policies sold here contain certain benefits, as do the laws in every other state. Data from the Texas Department of Insurance show that these mandated benefits account for about 4 percent of the cost of premiums, and mandated benefits improve access to important health care services like childhood immunizations, cancer screenings, and mental health care. Removing mandated benefits will provide negligible savings, as shown by “Consumer Choice Plans”—plans sold here in Texas that do not cover all of Texas’ mandated benefits. In general, insurers report lowering premiums less than 3 percent after removing mandated benefits from Consumer Choice Plans. And despite the name, consumers do not seem to be choosing these plans in large numbers. Less than 8 percent of people with non-group coverage in Texas are enrolled in such plans.