Consumer Response to a National Marketplace for Individual Insurance. Introduction


Federal lawmakers are interested in changing the law that prohibits non-group/individual health insurance from being sold across state lines.  For example, Representative John Shadegg’s (R-AZ) and Senator Jim DeMint’s (R-SC) Health Care Choice Act (H.R. 2355 and S.1015) would amend current law to allow for interstate commerce in health insurance plans while preserving states’ primary responsibility for the regulation of health insurance.  Advocates of this reform argue that state-level mandates for providers, benefits, and coverage, as well as other types of regulations (e.g. guaranteed issue, community rating, and any willing provider status) distort prices and that permitting national competition for such insurance has the potential to increase demand for individual health insurance policies.  The objective of this analysis is to simulate the difference between national and state-specific individual insurance markets on take-up of individual health insurance.  Though the analysis focuses on the individual insurance market, results are presented for both the individual and group markets because the effects of a national marketplace for insurance will also affect the small employer group market.

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