New Hampshire State Senator Andy Sanborn had a concise answer when Breitbart News asked what prompted him to introduce a bill to allow state residents to purchase health insurance from out-of-state providers.
“Jeanne Shaheen,” Sanborn said, referring to the current senior U.S. Senator from New Hampshire.
He could just as easily have said Hillary Clinton and Barack Obama.
In 1994, Shaheen, then a first-term Democratic state senator, championed the passage of a disastrous law that introduced two concepts—community rating and guaranteed issuance of insurance—first brought into public discussions of health care policy the previous year as part of the Clinton administration’s ill-fated Hillarycare proposals to the Granite State.
“That law,” State Senator Sanborn told Breitbart News “drove twenty-one health insurers out of the state.”
“Twenty-five years ago there were twenty-two different health insurers in New Hampshire,” Sanborn said. “Shaheen’s 1994 bill,” he added, “forced a change to insurance protocols to require community rating that drove everyone [except Anthem Blue Cross and Blue Shield] out of business.”
Ironically, as Conrad F. Meier noted in a 2004 article at Heartland.org, it was complaints made by Anthem Blue Cross and Blue Shield about the marketplace that prompted the passage of state Senator Shaheen’s 1994 bill.
Today, Sanborn noted, “Anthem has 76% to 78% of market, and their share continues to grow.” Though there are ostensibly four other health insurers in the state at present, Sanborn adds, none of them are positioned to gain ground on Anthem.
On the national stage, Congressional legislation designed to implement the “Hillarycare” proposals recommended by the Presidential Health Care Task Force chaired by then-First Lady Hillary Clinton were dead in the water by 1994. Yet eager liberal state legislators around the country soon passed legislation that imposed some of those “reforms” in their own states.
From 1992 to 1994, liberals in eight state legislatures—New Jersey, New York, Vermont, Massachusetts, Kentucky, Maine, New Hampshire, and Washington—passed laws that inflicted community rating and guaranteed issue requirements upon health insurers in their states, with disastrous results, as a 2005 report from the Heartland Institute and a 2007 report from the American Health Insurance Providers (AHIP), the national trade organization of health insurers that is largely supportive of Obamacare, confirmed.
As the 2007 AHIP report described it:
Guaranteed issue (GI) laws generally require insurers to issue insurance to any eligible applicant without regard to current health status or other factors. Community rating (CR) laws prohibit insurers from varying premium rates based on health status, and restrict the amount by which insurers are allowed to vary these rates based on case characteristics such as age or gender.
That same report concluded:
The goals of guaranteed issue and community rating reforms in the individual market were laudable–to make health insurance more accessible by ensuring that unhealthy or older individuals were not denied coverage or charged premiums higher than they could afford. However… these reforms frequently had unintended consequences that disrupted the marketplace. . .[W]e found that, measured in terms of market size, level of premium, and availability of insurance options, individual health insurance markets deteriorated after the introduction of GI and CR reforms. Often, insurance companies chose to stop selling individual insurance in the market after reforms were enacted which resulted in a decrease in competition. Enrollment in individual insurance also tended to decrease, and premium rates tended to increase, sometimes dramatically.
Shaheen’s bill proved so disruptive to the operation of New Hampshire’s health insurance market that by 2002, most of its components were repealed by the state legislature. But Shaheen, a politically ambitious first-term liberal state senator with strong connections to national Democratic campaigns when the bill first passed in 1994, was adept at deflecting political blame for the debacle.
Her husband Bill Shaheen, a New Hampshire attorney, played a key role in Jimmy Carter’s 1976 Presidential campaign. In 1984 Jeanne Shaheen managed Gary Hart’s New Hampshire campaign. In 2000 husband Bill played the same role in Al Gore’s New Hampshire campaign.
Shaheen’s eager promotion of a Hillarycare-inspired health insurance bill in New Hampshire solidified her already strong credentials among the liberal leadership of the Democratic Party.
As the health insurance market in New Hampshire unraveled under the law she championed, Shaheen’s political skills were in full bloom. New Hampshire voters elected her governor in 1996, 1998, and 2000.
In 2002, the year her signature health care bill was largely repealed, she narrowly lost a race for the United States Senate, but in 2008 she was elected to that office, and was re-elected in 2014.
Due to the McCarran-Ferguson Act of 1945, which granted insurance companies limited exemption from federal anti-trust laws, state legislatures around the country were able to, as Northwestern University Law School Professor Steven Calabresi wrote in 2013, “[set] up fifty separate state monopoly or oligopoly markets, each with its own set of state licensed health insurance providers.”
During the decade and a half between 1995 and 2010, the New Hampshire state legislature kept tinkering with the state’s health insurance market, making it increasingly driven by rules rather than free markets. The state legislature—Republican controlled, but frequently “moderate”—helped turn the state into one of the coziest health insurance cartels by taking the notion of mandating service to the next level.
“As a result,” Sanborn says, “insurers in New Hampshire now have forty-six service mandates. We have one of the highest levels of service mandates in the country.”
Consequentely, Sanborn notes, “New Hampshire is one of the most expensive places in the United States to get health insurance.”
To Sanborn it makes no sense “why I [as a New Hampshire resident] can buy car insurance from Arizona, home insurance from Tennessee, but can only buy health insurance from New Hampshire.”
Sanborn thinks his bill has a good chance to pass in both houses of the legislature, largely as a result of changing attitudes brought about by problems related to the rollout of Obamacare in the state.
“We were a shining example of how bad the Affordable Care Act could be. We have a federal-state partnership exchange. We blocked a state-based exchange. What we have is a hybrid that materialized out of thin air [based on the Obama administration’s regulations],” according to Sanborn.
“I can’t answer if the Affordable Care Act provides statutory authority for this hybrid,” Sanborn said.
When that federal-state partnership exchange opened for business, Sanborn explained, “they [Anthem Blue Cross and Blue Shield] were the only one [health insurer] who signed up. As a result the federal government gave Minuteman millions to start offering new plans to New Hampshire residents.”
Not surprisingly, bureaucrats who work for the State of New Hampshire’s Department of Insurance do not like Sanborn’s bill.
“The elephant in the room is the network. For a company to come into New Hampshire, the greatest barrier is setting up contracts with health care providers. If an insurance company doesn’t have deals similar to what Anthem or Harvard Pilgrim have, they’re not going to be competitive,” Tyler Brannan, an analyst for the New Hampshire Department of Insurance, told the Albany Times Union.
“If you pass this, and you go get that cheap plan in Mississippi or Oregon, you’d have to go get your care in Mississippi or Oregon. If you had a problem with the company, you’d have to go to the insurance department in Mississippi or Oregon,” Jennifer Paterson, an attorney for the New Hampshire Department of Insurance, told the Times Union.
Sanborn, however, isn’t put off by critics of his proposed bill.
“We want to encourage health insurers around the country to bring their policies into New Hampshire,” he said.
“I’ve been pounding on the door with this proposal for six years,” Sanborn explained, “but it continued to lose. My colleagues were concerned that its passage might result in ‘adverse selection’ and destroy the insurance market.”
“But last year,” Sanborn noted, “the implementation of the Affordable Care Act changed the dynamics.”
For first time, I’m using the Affordable Care Act against itself. It comes from a couple of things. First, under the Affordable Care Act, all states have to pick a plan that becomes their floor of minimum services. Second, the National Association of Insurance Commissioners [the 501 c 3 non profit organization of all the fifty state insurance commissioners in the country], the arbiters of the industry, [in effect], also approve the minimum Affordable Care Act plan in each state.
Sanborn argues that since each state insurance commissioner is a member of the National Association of Insurance Commission (NAIC), approval of a minimum plan in each state by an NAIC member constitutes that group’s blessing of each state’s minimum plan.
“States, especially New Hampshire, are very protectionist in their right to set the rules for the selling of insurance in their state,” Sanborn told Breitbart News.
“If the Department of Insurance in New Hampshire looks to the NAIC for how they should manage insurance in their state, and they’ve [the NAIC] approved minimum plans in all fifty states, and if the federal government says this minimal plan is good in, say, Alabama, well, if it’s good enough for the president, it should be good enough for New Hampshire residents,” Sanborn added.
Under Sanborn’s bill, out-of-state health insurers would be allowed to offer New Hampshire residents both the minimum plan approved in their state and the minimum forty-six mandated services plan approved in New Hampshire. Residents of New Hampshire would then be free to chose among all the plans offered by in-state and out-of-state health insurers.
“Now it’s hard for those who love bigger government to say this [my proposed bill] is a bad idea,” Sanborn said.
There’s one critic who works for the state of New Hampshire even Sanborn acknowledges he is unlikely to overcome, and that’s Democratic Governor Maggie Hassan, widely considered one of the most liberal governors in the country. In 2008, Hassan was a “vigorous supporter” of Hillary Clinton’s unsuccessful Presidential campaign.
“In the event of a veto of the bill by Governor Hassan,” Sanborn admitted to Breitbart News, “prospects of an override are zero.”
But such an override could bode well for the bill’s ultimate success after the 2016 election, when Hassan faces re-election. If Sanborn’s bill passes in 2015 and is vetoed, it may become one of the defining issues of the 2016 gubernatorial election.
As Obamacare continues to deteriorate, voters in New Hampshire may want to elect a Republican governor in 2016 who would vow to sign Sanborn’s out-of-state health insurance bill if it passes the state legislature in its next session.
The debate over the future of its health insurance market may also play a role in whether the Democratic or Republican nominee for President win the state’s electoral college votes in 2016, which could prove critical in a close race.