Consumer Response to a National Marketplace for Individual Insurance. Conclusion

06/28/2008

We find evidence of a significant opportunity to reduce the number of uninsured under a proposal to allow the purchase of health insurance across state lines.  The best scenario to reduce the uninsured, numerically, is competition among all 50 states with one clear winner.  This idea is not without precedent outside the health care industry, where Delaware has become the most favored state for incorporating a firm.  The most pragmatic scenario, with a good impact, is one winner in each regional market.  This is a compromise since the U.S. health insurance industry is only ‘half-way’ national (through large employer-sponsored national contracts with insurers with national provider panels) and this could provide a practical, more politically palatable approach.  The ‘five large state’ policy scenario is the least effective policy for increasing the number of insured people.  This is likely due to the fact that only one state of the five, Texas, had a combined regulatory burden that is greater than the 50th percentile of all states.

Although we have modeled the person-level impact of a national market on coverage, we are unable to assess the impact of such a migration on provider access or quality of care.  Nevertheless, a national market would lead to substantial additional health care access which should lead to health improvements among vulnerable populations who currently find health insurance unaffordable.  In addition, development of a national market requires no additional federal resources other than support for legislation to permit the development of such a change to the U.S. health insurance market.

Table 7. Impact of National Market (Scenario 2) and2008 State of the Union Proposal by State

 

State Status Quo National Market National Market & SOTU 2008
Individual Group Individual Group % Change Individual Group % Change
AK 25,037 254,263 28,179 256,505 2% 88,637 268,156 28%
AL 358,089 1,524,624 358,089 1,524,624 0% 756,128 1,559,473 23%
AR 468,958 906,086 486,742 906,535 1% 591,815 907,849 9%
AZ 458,356 2,000,931 473,107 2,002,528 1% 960,364 2,024,929 21%
CA 3,463,657 12,594,829 4,134,239 12,640,976 4% 6,524,469 12,695,976 20%
CO 345,832 1,719,774 397,590 1,728,751 3% 795,157 1,750,327 23%
CT 89,322 1,416,085 112,755 1,433,670 3% 285,887 1,455,601 16%
DE 75,208 353,904 92,063 354,008 4% 102,992 354,096 7%
FL 1,144,407 5,972,619 2,149,740 6,073,232 16% 3,318,945 6,088,419 32%
GA 532,298 3,415,490 705,663 3,449,363 5% 1,459,406 3,505,182 26%
HI 136,951 513,589 189,264 514,055 8% 221,737 514,251 13%
IA 192,956 1,202,769 319,789 1,210,057 10% 457,787 1,211,651 20%
ID 134,906 464,616 235,620 470,266 18% 311,348 471,552 31%
IL 405,168 5,251,628 468,404 5,280,963 2% 1,547,788 5,369,952 22%
IN 621,452 2,330,686 728,286 2,341,523 4% 1,008,499 2,367,869 14%
KS 121,745 1,136,929 135,052 1,139,573 1% 323,920 1,150,314 17%
KY 387,604 1,474,683 436,786 1,482,466 3% 769,118 1,495,250 22%
LA 255,053 1,561,763 308,748 1,576,169 4% 715,461 1,613,713 28%
MA 19,520 2,276,118 203,552 2,623,960 23% 628,438 2,682,821 44%
MD 191,638 2,080,518 489,813 2,189,508 18% 929,713 2,207,719 38%
ME 109,339 550,625 163,509 551,523 8% 183,695 551,766 11%
Ml 562,786 4,232,660 914,700 4,260,918 8% 1,418,993 4,266,494 19%
MN 226,333 2,180,219 264,055 2,184,629 2% 604,106 2,191,664 16%
MO 328,293 2,307,270 386,947 2,319,775 3% 836,461 2,348,159 21%
MS 241,562 980,110 249,421 980,632 1% 484,727 984,911 20%
MT 66,775 307,598 76,746 309,421 3% 167,966 316,351 29%
NC 640,622 2,998,459 1,137,836 3,049,092 15% 1,690,097 3,056,095 30%
ND 34,150 253,861 36,004 254,513 1% 86,926 259,888 20%
NE 81,174 671,256 85,171 672,228 1% 217,563 681,159 19%
NH 36,502 555,705 44,107 560,381 2% 113,391 572,337 16%
NJ 20,328 2,393,267 143,123 3,442,574 49% 651,233 3,666,466 79%
NM 240,329 637,256 263,614 638,385 3% 394,608 641,028 18%
NV 168,948 814,555 203,814 819,872 4% 416,470 827,414 26%
NY 121,626 6,753,047 705,435 7,714,923 22% 1,920,968 7,797,242 41%
OH 576,945 4,579,871 1,061,894 4,625,875 10% 1,746,612 4,634,302 24%
OK 209,904 1,208,503 236,684 1,216,491 2% 567,520 1,253,537 28%
OR 252,405 1,218,744 612,317 1,232,839 25% 759,688 1,234,526 36%
PA 644,614 4,853,335 1,028,563 4,877,657 7% 1,466,033 4,882,420 15%
RI 90,392 434,862 120,847 435,204 6% 137,875 435,350 9%
SC 225,440 1,395,668 237,629 1,401,073 1% 596,097 1,458,583 27%
SD 29,777 271,233 33,408 273,789 2% 88,288 283,719 24%
TN 401,215 1,948,370 463,574 1,966,210 3% 1,022,969 2,023,530 30%
TX 1,398,432 8,361,776 1,745,464 8,466,829 5% 3,672,305 8,648,112 26%
UT 371,112 876,221 387,514 876,517 1% 500,439 877,486 10%
VA 537,878 2,688,648 1,109,836 2,740,657 19% 1,547,058 2,747,230 33%
VR 48,290 252,989 74,855 253,427 9% 82,523 253,538 12%
WA 555,371 2,288,192 1,002,288 2,364,037 18% 1,298,386 2,377,834 29%
WI 276,530 2,239,075 297,050 2,243,965 1% 683,167 2,273,097 18%
WV 96,768 578,129 216,111 598,887 21% 366,364 602,540 44%
WY 35,246 177,949 43,078 180,070 5% 92,970 184,690 30%

In Table 7, we show the range of increased insurance coverage from the state of origin in the status quo situation to a national marketplace scenario.  Percent changes reflect the difference from the combined individual and group markets at status quo to a different scenario.  Highly regulated states such as New Jersey, Massachusetts, and West Virginia have the greatest percent changes. 

We also model the combined impact of a national marketplace and the 2008 SOTU proposal and find similar distributional patterns, but a clearly accelerated movement from states where the insured are domiciled.  In New Jersey, the percent of individuals with insurance increases from 49% to 79% due to the addition of the SOTU proposal.

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