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ThoughtsOnline

Thursday, February 25, 2010


Conservatives propose getting rid of state laws that ban out-of-state insurance companies from selling insurance... yet this proposal doesn't address the real problem... and as such, won't accomplish much of anything.

The problem isn't so much that some insurance companies aren't allowed to sell insurance to residents of, for example, New York, the real issue is that those insurance companies don't want to sell insurance in New York because they would be forced to play by the rules New York State has established for insurance companies wishing to sell insurance to New York residents... and they've decided that doing so is a good way of losing money.

So allowing an out-of-state insurance company to do business in New York only changes things if you also allow the out-of-state insurance company to ignore New York's rules... and if you allow out-of-state insurance companies to ignore New York's mandates and caps on premiums, you're placing New York-based insurance companies at a huge disadvantage unless you also allow New York-based insurance companies to ignore New York's mandates and caps on premiums...

... and if you did that, you wouldn't need to open up New York to out-of-state competition, there would be plenty of competition from New York-based insurance companies.

In other words, the problem lies with the mandates and the limits on premiums. Get rid of those and you accomplish pretty much everything that opening up the border would accomplish.