Existing policies should only exist if they are supported by the companies underwriters. That is, theoretically the companies should make money off them. Any other system, even if government backed, won’t work.
Selling insurance across state lines is problematic, for the sole reason that states are the primary regulators of insurance. Cross a state line and you double the regulation.
I don’t want to say “nonsense” to your post. I am sure you are correct about regulation being the problem. However, much commerce takes place across state lines without restrictive regulation. So why not health insurance?