Many Illinois citizens, facing unaffordable insurance costs within state borders, are forced to cross their fingers when it comes to their family’s health.  It doesn’t have to be this way.   Illinois families and children can live healthier, happier and safer lives.

Every day, Americans purchase products from around the country—vegetables from California, fruit from Florida, sugar from Louisiana, and cars from the Carolinas and Michigan. In almost every area of commerce, we operate in a single, beneficial national market where consumers have the freedom to choose.

When it comes to health insurance, however, this freedom stops at the state border if you purchase insurance independent of an employer plan.  This affects those who work in or run a small business or any business that doesn’t offer health care benefits.  If you are one of those people, you currently live under a regime of 50 disconnected state insurance markets, blocking many from affordable health care options that are freely available elsewhere.

Uninsured Illinoisans are faced with significant hurdles when entering the insurance marketplace. Among them are limited choices of insurers, inflexible benefit options, and the high cost of health insurance, often due to intrusive mandates from the state.  Opening the Illinois market would address these three concerns and give our citizens greater opportunity for better healthcare.

Currently, similar legislation is being considered in Congress and in the Colorado legislature. The Illinois General Assembly should propose and pass legislation that empowers Illinoisans to purchase health insurance from providers in any of the 50 states.

Health Care Choice:  Empowering Families 
As an illustration of how empowering families might work, we compared a family of four consisting of four non-smokers – father (age 38), mother (age 34) daughter (Age 16) and son (age 14).  We looked at the most comprehensive policy offered by Blue Cross/Blue Shield (BC/BS) of Iowa (Alliance Select Comprehensive 1000) and Illinois (Select Blue) with a $1,000 deductible.   We also compared downstate Illinois with Chicago.

In all, our family of four would pay $867.52 per month in premiums in Chicago and $632.42 per month in Springfield. For the Iowa policy, they would pay $616.05 per month. With the ability to purchase insurance in Iowa, a downstate family of four could expect to save $200 per year while a Chicagoland family would save over $3,000 per year.

Another example of empowering consumers comes from quote comparisons of almost identical plans from Unicare, an insurance provider.  A married couple of 35 years of age looking for a high deductible health plan with low monthly premiums can expect to pay $163.00 per month in Terre Haute, Indiana for the Unicare saver 2000 plan.  That same couple in downstate Illinois purchasing a nearly identical plan, Unicare Fit 2000, pays $201.00 monthly.  By purchasing the nearly identical Indiana plan, that downstate couple saves $456 per year.  The only major differences in the two plans were that the Fit 2000 plan covers office visits for chiropractic care, mental health and wellness baby care.

Opening up the Illinois market also means offering more variety in terms of policies. In the Illinois- Iowa BC/BS policy comparison, for instance, child wellness care (immunizations, physicals etc) is covered to age 16 in Illinois while in Iowa it was age 7.  However, in the Iowa policy there is no deductible for prescription drugs, where in the Illinois policy you pay a deductible for prescriptions.

Another interesting difference was a $100 deductible in the Iowa policy for an emergency room visit if you weren’t admitted to the hospital.  This deters unnecessary ER visits.  BC/BS of Illinois has no such deductible.

Open state markets will also bring new programs to Illinois. Michigan BC/BS, for example, offers Young Adult Blue.  This insurance is targeted to the 18 to 30 year old “invincibles,” and is available for as little as $47 per month.  This insurance has a $1,000 deductible and offers discounts on prescription drugs.  No comparable BC/BS product today exists in Illinois.  With open markets and competition, it could, offering better choices for all citizens.

While insurance in the individual market in Illinois is less expensive than the national average, there is ample evidence in other states that citizens are paying less than Illinoisans for health insurance.  According to a survey of more than 2.9 million policies serving more than 4 million people done by Americans Health Insurance Plans, an average individual insurance premium in Illinois is currently $2,499 per year.  In Iowa, it’s $2,202 per year while in Michigan would $1,878 per year (see Appendix A, Table 1). For the average sized family in Illinois, we also see that while insurance is more expensive in Missouri and Kentucky, it is less so, again in Iowa, ($4,407), Michigan ($4,118), and Wisconsin ($3,087) (see Appendix A, Table 2).

The Benefits and Mechanics of Choice 
One culprit in health insurance inflation comes in the form of benefit mandates, which are regulations that force consumers to pay for treatments and services that they will never need. States have passed more than 1,900 benefit mandates since 1965. Here in Illinois, we have 39 such mandates. To put that in perspective, Minnesota leads the nation with 64 mandates.   Idaho has the fewest at 14.  Our neighboring states vary—Iowa has 23, Michigan 26, Wisconsin has 31, Indiana has 34, and Missouri has 39. These mandates cover services ranging from hair prosthesis – also known as wigs – to professional counselors and social workers. These mandates raise health insurance costs for policyholders, and, as a direct result, increase the number of people who are priced out of the system.1

In many ways mandates are difficult for policymakers to reject.  A mandate often only adds a small price to for what is deemed an important policy goal.  What legislator would be against breast cancer  exams?  Or, who can argue against expensive diagnostic procedures when they have the potential to save a life?  While the expense is small individually, the cumulative effect of 39 mandates can be expensive. Research has shown that even small hikes for policyholders can have a big impact. The Congressional Budget Office once estimated that for a 1% increase in the cost of coverage, 10,000 Illinoisans lose coverage.

By expanding the market for health insurance, Illinois will give families the freedom to choose which mandates matter to them. As consumers shop without regard to state boundaries, they can examine the cost of the policy benefits. Families looking for basic, less expensive health coverage can choose a policy with few mandates. On the other hand, consumers looking for more specialized services – say infertility treatments – could purchase a policy that included that benefit.

Opponents of expanded health care choices argue that consumer protections could be undermined by free choice, as people will gravitate toward less expensive health insurance policies.  What they fail to address, however, is that “consumer protections” do no good when they price consumers out of the health insurance marketplace—and that a more diverse, competitive system will provide multiple mandate options for those who need them.

Another argument is that young and healthy will opt for less expensive insurance leaving the old and infirm to their own insurance pools where they will no longer be subsidized by the young and healthy.  Given that nearly 60% of the uninsured are under 35 years of age and are already not purchasing insurance, this already is happening.  The way to bring young people back into the fold is to offer them options that suit their needs.

How to Open Illinois’ Market 
The structure for this type of market has long existed, and has also proven to be successful.  Much like state-chartered corporations and financial institutions doing business here in Illinois, health insurance products and regulations would be enforced in the originating state.  That means the licensing and regulatory requirements of the originating state would govern the insurance policies.  Things such as consumer protection, regulations regarding premiums, premium taxes and benefit mandates would follow the rules of the state where the insurance is sold.

If an individual had a dispute with an out-of-state insurer, like in similar markets already existing in Illinois, the originating state rules would be applied.  The originating state, to protect premium taxes or high-risk assessments, has a clear incentive to enforce its regulations—and Illinois courts can apply another state’s regulations to enforce them as well.

If enacted, consumers would no longer be limited to picking only from a restricted circle of policies. Instead, consumers would be able to research a wide range of policies that are qualified in one state and offered in another. Health insurance choice wouldn’t end Illinois’ mandates, nor would it end state regulations of insurance companies.  It would, however, allow families and individuals to find a policy to fit their needs and their budget, while encouraging more competition, better programs, and better prices in the long run.

Giving Consumers Choice and Control 
In 2002, when Gov. Blagojevich took office, 1.7 million Illinois citizens lacked health insurance.  Today, the number is roughly the same.  Clearly, we need new solutions.

Once Illinoisans have the freedom to choose and can harness the power of the marketplace, they can tailor their insurance choices to their needs. A dose of competition will allow for more and better health insurance choices. Opening the Illinois market will create incentives for insurance companies to offer innovative and customized insurance products. Most importantly, by making insurance less expensive, we can reduce the number of Illinoisans who seek but are unable to afford coverage.

Members of the General Assembly have it within their means to bring down the high cost of health insurance.  Creating a more open environment that expands choices for consumers while balancing the needs for consumer protections is paramount to bringing down the high cost of health insurance.  Model legislation to open a state market already exists.  By introducing similar legislation and opening up its markets, Illinois will be taking the first step towards a long- term vision of more affordable, quality health care for all citizens.