\n\n“Unfortunately for the theory, it\u2019s based on some false assumptions.<\/p>\n\n\n\n
For one thing, it assumes that there is currently a national marketplace for things like auto and life insurance. There isn\u2019t. In the United States \u201cnational\u201d insurance companies like Geico and Progressive are really networks of state-based companies. When you buy insurance, you\u2019re buying it from a company with an office in your state, licensed to do business in your state. If you want a better deal from another state, you have to physically migrate to that state. But the good news is when you do, you can usually transfer your coverage fairly easily. Say you buy auto coverage in Virginia, and then move to Colorado. Geico of Virginia hands you off to Geico of Colorado with a few mouse-clicks. Happily, state legislatures have worked to make these sorts of handoffs seamless, by harmonizing<\/a> their insurance laws.<\/p>\n\n\n\n Yes, some states have over-regulated their health insurance markets. Badly. So why not allow customers to vote with their keyboards instead of their feet? To understand why that\u2019s not a sound idea, in our system, consider a thought experiment. Imagine if we let people pick their \u201cgoverning state\u201d with respect to taxes instead of insurance. I could, for example, opt to pay South Dakota\u2019s dirt-cheap tax rates while still living, and using the roads and police, in high-tax New York. Why would New York stand for that? Why should it? Under our Constitution, state sovereignty isn\u2019t a suggestion, it\u2019s the law.<\/p>\n\n\n\n Notice how nobody is clamoring for interstate purchase of auto and life insurance. That\u2019s because those markets work pretty well, and that\u2019s<\/em> because the coverage is individually owned. <\/em>Most health insurance, alas, is not. Most Americans don\u2019t actually own their health insurance. They participate in a prepaid group health benefit plan, usually provided through an employer or the federal government. By definition, such a plan isn\u2019t portable because of who owns it (i.e., not you).<\/p>\n\n\n\n Half the U.S. population relies on employer-sponsored group health benefits, not because of state mandates, but because of federal tax subsidies for employer-sponsored group health benefits. End those subsidies, and more Americans will own their health insurance, and it\u2019s a sure bet health insurance will begin to look more like auto and life.”<\/p>\n\n\n\n …<\/p>\n\n\n\n “Instead of trying to create an unnecessary \u201cnational marketplace\u201d in insurance, which only makes Uncle Sam even more of a national insurance commissioner than he already is, states should simply streamline their regulations and promote portability via an interstate agreement approved by Congress.<\/p>\n\n\n\n