Public Option Opt Out and the Commerce Clause

by Bruce Webb

Well it looks like Harry Reid is going to introduce a bill that includes a Public Option with a state opt-out provision. Which I guess means the Tenthers won’t have to secede from the Union after all. But it raises some questions.

Let’s say I am from Washington State and have an individual plan through the Public Option and am visiting relatives in Indiana, an opt out state. And I fall down on the ice and break a bone. Under those circumstances I would think they would have to accept my insurance, opt out can’t mean that you just become uncovered every time you fly over Mississippi. That’s scenario one.

Scenario two. I move to Indiana temporarily for a contract job lasting more than a year. Surely I can maintain my coverage?

Scenario two A. I move to Indiana on that temporary contract and get engaged and marry my High School crush. (Hi LT!). Am I prevented from adding her to my plan?

Scenario three. I am an executive in Seattle for a company that buys insurance from the PO but maintain my full time residence in Coeur d’Alene Idaho (which as a live free or die red state opted out) and commute by plane. Is my Public Option plan affected?

Scenario four. I am a self-employed consultant based out of my lake front house in Coeur d’Alene but spend much of my time working for clients in Portland and Seattle. Whether or not I maintain a residence in either city what prevents me from stopping by the insurance office and signing up for the PO through the Exchange? Can one state actually prevent you from buying a perfectly legal product in another state and having your local doctor accept that product? What use then is the Commerce Clause?

Scenario five. I run a consulting shop incorporated in Idaho but with a small office in Portland and Billings and a larger one in Seattle. If Idaho has opted out I am actually prevented from buying a group plan on the Washington Exchange and including myself and my small Oregon and Montana staffs in it along with my larger Seattle group?

I could multiply scenarios endlessly but the question remains: how do individual states enforce an opt-out and under what circumstances? How much presence do you have to maintain in a state that offers the public option to be able to buy through their exchange?

Under our system states have a certain amount of freedom to decide what gets bought and sold within their state boundaries plus some rights to regulate what crosses those borders (for example fireworks). But I just don’t see how they can block medical providers from accepting health insurance policies written in another state or realistically how they can block their own citizens from purchasing such insurance. And certainly I can’t see setting up a system where tourists and part-time residents have their insurance honored but full time residents don’t.

Unless states can mandate that all individuals and employers purchase insurance in-state in addition to whatever coverage they may have through another state I just don’t see how opt-out does anything but prevent insurance sales on your own state exchange.

Which is why I don’t think supporters of the PO have much to worry about as concerns Opt-Out. It seems to just be a sop thrown to more conservative states who don’t want to get tinged with accusations of collaboration with socialism (or something). From a mechanical standpoint I just don’t see how you enforce this. Any ideas?