State of Washington Takes up Interstate Compact Proposal

Posted by John LaPlante in Health Care on Feb 26th, 2010 | no responses

Roger Stark of the Washington Policy Center comments on legislation in that state that would allow for “an interstate compact for the sale and issue of health benefit plans.”

The obstacle might be that it would require other states that wished to participate to let Washington call the shots. The legislation says, in part, that “Insurers offering qualifying plans must comply with, and are subject to, the laws of the compacting state in which the purchaser resides.” That doesn’t sound like much of an advance for consumer freedom, in that you’re still stuck with whatever regulations your home state’s legislature put on your insurance purchases.

Stark sees the same problem: “”The compact would function like an insurance exchange and would potentially be subject to restrictive oversight by the Insurance Commissioner. For example, if the IC imposed all 57 of Washington’s mandates on every out-of-state plan sold through the compact, we would not have a significant difference from our existing insurance climate. On the other hand, if mandate-free or mandate-light plans could be offered in Washington, we would see prices drop and utilization increase.”

If a number of states, on their own, enact such compacts, we could see significant benefits. We would also avoid the problems raised by federal action, which John Graham has pointed to.