Health care reform and buying coverage across state lines

I hope you all had a wonderful Thanksgiving. Now that that's over, Congress is back in session, and the Senate is tackling the health care reform issue.

One of the things that is being discussed in reforming our health insurance system is allowing people to buy insurance plans from other states where they might be able to find less expensive plans. I'm not sure how this is supposed to work, and here's why.

One reason the cost of plans is lower in some states than is others is the number of mandated services a health plan is required to cover. The more a plan is required to cover, the higher the cost of coverage. For example, California has 56 required services that each plan must cover.  By contrast, Idaho has 13 state mandates. We aren't at the top of the list by any means; Virginia has 60 mandates and Maryland has 66. Want to check out what kinds of things are mandated, click here.

Another area that needs to be addressed is how physicians and others are paid. HMO plans in California tend to be more expensive than PPO plans in the individual market, but you have lower out of pocket costs when obtaining care on an HMO plan. (The opposite is usually true in group health insurance.) The reason this can be is through very specific networks of contracted doctors. Most people know that you don't have coverage if you go outside the HMO network unless it's an emergency. So maybe you just don't offer HMOs between states.  But PPOs have networks too. If you see a contracted doctor you are covered at a higher level than non-contracted doctors. So if you are in California and buy a plan from Kansas, would you always be covered at the lower reimbursement rates?  Larger carriers like United Healthcare and Aetna have networks in most states, but what about the smaller, regional carriers without networks in other states? How would that work?

Another aspect of provider payment that affects premiums is how much providers are paid. Care in some states is less expensive than others, so how do you pay providers in the 'expensive' states versus the less expensive, and what will that do to the cost of insurance in those states where lower costs of care are factored into the cost of insurance? You could still end up with the problem of some people being 'under insured' depending on how reimbursement is worked out.

So be careful what you ask for, you may gt it. The more you want covered in a plan, the more it's going to cost. Just remember the old marketing adage, if it sounds too good to be true, it usually is.