Because of this: "It's pretty hard to set up a network of doctors and hospitals that will work for patients in both Iowa and New York."
Insurance companies save costs by establishing a network of doctors, hospitals, and pharmacies that they negotiate with on how much they have to pay for services rendered. An insurance company in Iowa won't have a network established in New York, and they won't want to go to the expense of establishing a network for the occasional New York customer. So every bill they get from New York will be for the full cost of the service. Every visit you make you will pay the far higher out-of-network deductibles and co-pays. Considering the risks to them and the fact that they could never make money off of you I'd expect that they would just decline your business.
Insurance Companies ARE establishing networks out of state.
Mine, Priority Health has Hospitals/Doctors thru out the US that are considered in Network for services. Granted not as many as here in my State but that network continues to grow.
It’s a selling point when they come trying to get our Company’s Business. I Have been involved in that process now for the past 10 years when looking at options for our Employees Plans. All that we have looked at have some form of out of State coverage (In Network cost/coverage).
If they do NOT expand their Networks they lose customers.
It’s a big deciding factor when we choose. So yes they DO and are continuing to try to establish a nation wide network of coverage.
How would establishing networks in Iowa and New York be different from establishing networks in, say, Sacramento and San Diego, or Jacksonville and Miami? Insurance companies are already handling the problem of geographically separated networks that don’t share customers. I don’t see how whatever they’re doing to handle it at the state level wouldn’t scale up to the national level.
This is not a matter of can’t but instead a matter of DON”T WANT TO because the divide and conquer process they have is too sweet to give up.
The argument against national sales of health insurance is weak at the very best. The arguments are simply excuses and nothing like reasons.
The system is broken. Broken very badly.