That is no example at all.
This vey same thing would be the case in an open healthcare market. They would be bending over backwards to lure you to their store with “bets rates, best coverage, lowest copays, and better choices”.
You ignore the major difference and that's the way the insurance companies operate. Insurance companies control their costs by establishing a network of providers - doctors, hospitals, pharmacies - with whom they have negotiated a set price to be paid for their services. This allows them to keep their costs lower and more predictable. The insurance companies encourage their customers to use this network by offering a lower co-pay, a lower deductible, and paying a higher percentage of the bill. They discourage out of network providers by doing the opposite, higher co-pays, higher deductibles, covering a lower percentage of the costs. If an insurance company is not currently doing business in my state then they have no network established. They have no way of controlling costs. So their chances of making money off a policy they sell me is close to zero. Quite the opposite, I could quite likely be a drain on their profits. And so long as the business from my state is in the form of a single policy here or a single policy there then there is no incentive for them to go through the time and considerable expense of setting up their own network. So since they pay more on claims and I pay more in deductible and co-pays and charges then were is the incentive for either side to enter into the lose/lose proposition?
This isn't just theory on my part. Five states currently allow the purchase of insurance across state lines - Kentucky, Georgia, Wyoming, Maine, and Rhode Island. Two of those began doing it before Obamacare was enacted. And two date, or as of February 2017 at least, not a single insurance company took advantage of the law and not a single person bought a policy. That should be clear evidence that allowing the sale will do nothing to lower premiums.
What you are describing are the old HMO plans that came around during the open market era. And yes they were cheaper but they were optional and all parties had a choice to purchase or not knowing there would be limitations in care. You got what you pay for...
But what we have now is HMO style coverage in even the best and most expensive of plans mandated by government so there is no longer a “choice” of what kind of care and benefits you will receive for your money. You are going to get limited care with an insurance “adjuster” in between you and your doctor no matter what.
We have to remember cause and effect in this. When a market gets competitive like this the “suppliers” also have to become competitive, ie Hospitals, Medical product suppliers, Doctors, Etc. will also have to readjust their super inflated prices in order to attract business from the insurance companies. Truly, the market will adjust throughout all the way up the chain.
Example...A disposable plastic water pitcher and small washtub will no longer cost 400 dollars as currently billed by hospitals.
May I ask who your health insurance carrier happens to be?