Last week I announced on this blog our plan to support legislation that will allow Wyoming health insurance providers to sell policies that their company or affiliates sell in other states. Thankfully, so far this idea has been well received. But some question why Wyoming needs to pass this law: didn’t the Legislature pass an interstate compacts bill just two years ago that allows Wyoming to join with other states for the interstate sale of health insurance?
Yes, that’s exactly what Wyoming did. It was a great idea. Alas, it has not worked out.
In March, Regina Meena wrote an excellent Liberty Brief detailing the advantages of Interstate Compacts over the insurance exchanges required by Obamacare. We were very vocal about this option during the 2011 Legislative Session when the insurance exchange committee was being funded, and legislators rightfully wondered why Wyoming’s insurance commissioner had not reported any progress in establishing the compact. When called before the House Labor Committee to testify, Insurance Commissioner Ken Vines reported that he had identified compatible states and sent letters to other insurance commissioners, but had not received a favorable response.
Indeed, Vines did identify the states and write the letters as required by the law in November, 2010. Alas, he made about as strong a sales pitch for compacts as could be delivered by Eeyore the donkey in Winnie the Pooh:
The idea appears to be that individual health insurance policies approved in one state where an insurer is licensed could be sold in other states . . . . The law’s stated purpose is to lower the cost of health insurance products to Wyoming residents . . . . The hope is that the larger population of several states with a single approval for sale . . . will cause insurers to develop and rapidly introduce lower cost effective products . . . .
Because the federal health reform law enacted in March, 2010, has consumed much of the resources of insurance departments for the past several months, I have waited until now to contact you about this law. (Emphasis added)
The responses, which came from various other state insurance commissioners, were equally enthusiastic. A few examples:
South Dakota:
It is unclear to us how this would result in lower cost effective products . . . . At this time we are reluctant to commit to such a reciprocal program given the inherent obstacles and the likelihood that those obstacles can be overcome.
Oregon:
[Wyoming’s law] does not appear to be consistent with the direction Oregon is taking at this time as we implement meaningful health care reform. (Emphasis added – though I’m sure no pompous zing was intended. Thanks, Oregon!)
Washington:
Wyoming and Washington’s consumer protections and mandated benefits result in markedly- different products and regulation in the individual market, with the result that further instability of that market in our state is likely, if products designed for a different regulatory framework are introduced here at this time.
So it goes. Click here to download the letters in pdf format. It’s presumptuous to read too deeply into these letters, but it seems Vines’s tone is that he was going through required motions, and the other states responded in kind.
To a certain extent, these bureaucrats are just following orders. State executive agencies are not in a position to legislate, and it’s not up to them to lobby for authorizing legislation. However, if bureaucracy is indeed the lofty “civil service” it’s made out to be by progressives, one would think these commissioners (and their intelligent, go-get-‘em staff members) could at the very least run the idea past their respective governors, who might take a great interest in encouraging the legislative branch to take such action. And if these commissioners were half as gung-ho for state-based ideas as they are for implementing Obamacare (a law that, despite over a year of sales pitches after its ratification, remains very unpopular nationwide), states could take innovative steps like insurance compacts instead of marching lockstep to the federal drumbeat.
So, with this new legislation, instead of entrusting insurance commissioners to create a marketplace, state barriers will be toppled and companies will be free to access a half a million customers here in the state of Wyoming and sell products that were previously unavailable. There are still plenty of federal and state speed bumps that could hinder the effects of this bill, but it’s a strong step that aims to empower consumers and surrender the claim that government can run health care.
