Trump's "Across State Lines" Baloney

By executive order President Trump "is expected to direct a trio of agencies to rewrite federal rules to allow trade associations and other groups [to] offer their own health plans" (link). "They will be able to buy, they'll be able to cross state lines and they will get great competitive health care and it will cost the United States nothing," Trump said today.

Baloney to his implying that group rates are inherently cheap. Group insurance has been sold across state lanes for decades. The major kind is employers who buy insurance for their employees who live and work in multiple states. Employers with many employees all in the same state also buy group insurance. For decades state insurance departments or state legislators decided what makes a legitimate group. The criteria has become less strict. Now Trump and others want the federal government to decide what makes a legitimate group, and it's likely no rules at all.

However, this will have little or no effect on insurance underwriting. Insurers will continue to evaluate members of small groups individually. Imagine a group consisting mostly of people in very poor health, e.g. most have had heart attacks. If it offers coverage, a rational insurer will do so with a very high premium, one commensurate with the poor health of the individual members. There is no miraculously cheap rate simply as a result of making a group. Also, why would a relatively healthy person -- even if he/she is a member of the group -- buy this high-priced group insurance when he/she could buy cheaper individual insurance?

http://www.factcheck.org/2017/07/selling-insurance-across-state-lines/

Trump's move is not near radical enough. The medical insurance market for individuals under age 65 is a lousy market because the risk pool is too small. The risk pool is too small because millions of individuals have medical insurance via his/her employer's group insurance. That is a result of irrational government policy. The radical move would be to change employer-paid medical insurance like I said here.

In contrast the individual insurance market for individuals over age 65 is large, vibrant and competitive. Many retired people buy Medicare supplement or Medigap or Medicare Advantage policies because they don't have an employer buying post-retirement medical insurance for them.