Hoping to address escalating health insurance costs, Wyoming legislators are exploring ways to make it easier for residents to buy policies from out-of-state companies.
Lawmakers have already drafted legislation that would allow Wyoming to accept policies approved in other states. A Natrona County representative recently authored a second bill to give state residents the ability to buy out-of-state insurance.
Conservative groups have promoted the sale of insurance across state lines as an alternative to the Affordable Care Act. Advocates say allowing such sales would result in lower costs for consumers through larger risk pools, competition and fewer regulatory burdens.
Wyoming needs innovative approaches to deal with rising health insurance prices, said Rep. Tom Reeder, who authored one of the bills.
“We just have to look at other ways because of the cost of insurance,” he said.
Others are skeptical the legislation will have a significant benefit. A study released last month found state-line legislation has been largely unsuccessful, in part, because it doesn’t affect the actual cost of health care — the primary driver of high insurance prices.
“If you live in Wyoming, you’ll pay Wyoming prices,” said Sen. Charles Scott, R-Casper. “The costs are higher here.”
Under existing law, a company based in another state must be licensed
before it can sell insurance in Wyoming. The company must also submit its policies to the state for approval. The process typically takes about 45 days and costs less than $1,000, said state Insurance Commissioner Tom Hirsig.
The new bills have the potential to cut wait times for businesses that would like to sell to Wyoming customers, he said.
State lawmakers have already made one attempt to facilitate the sale of insurance across state lines. In 2010, the Legislature passed a bill directing then-Insurance Commissioner Ken Vines to approach other states about developing an interstate compact for insurance sales.
The commissioner found little interest, Hirsig said.
“We don’t have a lot to offer,” he said. “We have a low population. Most of our health care costs are higher than other states.”
The new bills take a different approach. Legislation already under consideration by the Joint Labor, Health and Social Services Committee would allow the sale of insurance policies that have already been approved in other states.
The legislation would reduce the regulatory process for an outside insurance company that wants to operate in Wyoming, said Scott, the committee’s chairman. The companies would still need licenses, but wouldn’t have to wait as regulators approved policies that have already been accepted by other states.
“There is a potential for saving money from that process,” Scott said.
The bill might lower costs, but it probably won’t mean Wyoming residents will enjoy the lower insurance rates of neighboring states like Colorado. That’s because the costs of delivering health care are higher in Wyoming.
Medicare pays less for procedures in Wyoming, resulting in higher costs for patients, Scott said. The state has a shortage of some health care providers, which results in fewer discounts, and hasn’t enacted tort reform.
“The sale of insurance across state lines isn’t going to change that,” he said.
Other legislators are more optimistic. Reeder’s bill is designed to give Wyoming residents the opportunity to buy insurance that’s already being offered in other states.
Developing larger insurance pools would spread risk and lower costs, he said.
“A large portion of our current health care problems are the result of small risk pools confined to state borders that cause a lack of affordable health insurance, which in turn creates a lack of insurance coverage,” he explained.
However, a study released last month by the Center for Health Insurance Reforms found state lines legislation did not “address the true drivers of health insurance costs.”
The center studied legislation from six states — including the 2010 bill enacted in Wyoming. It found the bills were mostly unsuccessful because of the localized nature of health care and difficulties outside companies experience in attempting to build a provider network.