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Health provision gives insurers a bonus

A stethoscope wrapped around a roll of $20 bills represents the costs of health care.

TEXT OF STORY

Kai Ryssdal: As of today there are just seven shopping days 'til Christmas. Also, just seven days left for the Senate to meet its self-imposed deadline of having a health-care deal by then.

Now that a public option in any form is off the table, the insurance industry is set to get about 30 million brand new paying customers without having to worry about price competition from the government. Marketplace's Gregory Warner reports there is another part of the bill that's going to work out well for insurers.


GREGORY WARNER: The provision would allow insurance companies to sell policies across state lines without having to tailor them to the regulations of individual states. Instead, they could follow the rules in the state where the insurer is based.

Deborah Chollet is a senior fellow with Mathematica Policy Research in Princeton, N.J.

DEBORAH CHOLLET: If a state requires that health-insurance plans cover fertility treatments or cover mental health to a minimum level, a small carrier coming in from another state might strip those benefits out because those benefits are not required.

Chollet says that would set off a price war among insurers who could compete for customers by offering cheaper plans with fewer benefits.

John Arensmeyer is CEO of the Small Business Majority in Washington. He says more choice is a good thing.

JOHN ARENSMEYER: Right now the only choice in small states are insurance companies who are regulated in that state to sell insurance. There's no opportunity to get any economies of scale.

Robert Zirkelbach is a lobbyist for the insurance industry.

ROBERT Zirkelbach: Every state imposes different regulations, requirements and benefit mandates that vary across the country. And so for health plans to be able to provide coverage in all of these states adds complexity, and it adds costs for patients.

But opponents say the provision reduces state protections for consumers, and puts more of the burden on people to know what they're buying.

In Los Angeles, I'm Gregory Warner for Marketplace.

About the author

Gregory Warner is a senior reporter covering the economics and business of healthcare for the entire Marketplace portfolio.

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