On August 2, 2011, Senator Lisa Murkowski (R-AK) was joined by Senator Lamar Alexander (R-TN) and Mike Enzi (R-WY) in introducing a new bill - S. 1500 - to allow for the sale of child-only policies across state lines. One of the consequences of ObamaCare is that many insurers have stopped selling child-only policies (COP) in many states because ObamaCare prohibits the denial of coverage for any pre-existing conditions.

At first blush, one might think that the Murkowski bill is a good thing because it advances the Republican idea of allowing insurers to sell across state lines. That is a short-sighted view of the legislation.   In fact, Murkowski's legislation is horribly misguided for the following reasons:

1. It addresses a symptom, rather than fixing the problem. The problem is ObamaCare and the way it bans denial of coverage for pre-existing conditions (it lets people wait to get sick before buying coverage rather than limiting the guarantee of coverage only to those who maintained continuous coverage). The way to correct the problem would be to repeal the offending provisions of ObamaCare, including those related to denial of coverage for pre-existing conditions in child-only policies (the fact is that the pool is too small for these policies to bear this kind of risk).
   
2. Rather than expand coverage for child-only policies, it will likely have the opposite affect leading to fewer COP policies being available.  How? Assume a scenario where an insurer in Tennessee is still selling COPs but there are no insurers selling these policies in the states surrounding Tennessee.  Parents of a child with a pre-existing condition from Mississippi, Alabama, Georgia, North Carolina, Kentucky, Arkansas and Missouri will rush to Tennessee to buy a COP as the only affordable source of insurance for their very sick child. This will negatively affect Tennessee's risk pool, leading to increased premiums, parents of healthier kids will drop out of the pool, leaving only the very sick.  This will lead to a death spiral for COP policies as insurers in TN would stop offering the COPs altogether.  End result: fewer, not more, kids would have insurance.   
3. It signals a capitulation by moderate Republicans that ObamaCare is here to stay. Murkowski and Alexander are often the first among Senate Republicans to cave in to Democrats and Enzi has worked regularly over the past decade, including with the late Teddy Kennedy (D-MA), to advance big government policies.
4. S. 1500 fails to understand the intended purpose of allowing for the sale of insurance across state lines.  The idea is intended to reduce the impact of state government regulations and mandates that drive up costs. Letting consumers buy across state lines let them migrate from high-cost, high-regulated insurance policies in their home state towards more affordable policies in another state that are free from heavy government regulation.  So allowing for the sale of insurance across state lines will effectively encourage competition to help reduce costs in the face of oppressive state regulation.  Murkowski-Alexander is misguided because they are trying to use the sale of insurance across state lines to circumvent the impact of onerous federal regulations, something that will ultimately prove impossible as long as the federal law remains in place.  
5. Politically, it gives Democrats a chance to play politics.  If the Democrat-controlled Senate holds a vote on the bill, Democrats who support the law would be able to  say they "fixed" the problem (the same one they created) - despite the fact these Democrats know this fix would only lasts for 2 years until ObamaCare fully kicks in.  After two years, child-only policies will die off as people will rush to the exchanges at a tremendous cost to taxpayers. 

Be sure to follow AHEC on Twitter @TheAHEC and at Facebook.com/TheAHEC.