That's a good question KOD.
From what I understand, it is one of those issues where because of the way it is, it is impossible to change.
That is to say that each state has an insurance commission that has set-up regulations that are specific to that state. An insurance company can choose to do business there based on the regulations and if they think they can be profitable.
If there is competition, the states would then have to create a more favorable environment to invite competition and, therefore, would have to adjust their regulations...something they don't want to do.
In other words, states say it can't be done because rules and regulations are different but, those states have established the rules.
Confusing I know but, this is the party line on why insurance can't cross states. Mags is an insurance expert but, it seems to me that if risk can be spread to a larger pool (more states) premiums would drop.
I've never bought into this Republican argument. The theory is, a CA consumer could buy a UT policy which would not contain the CA specific mandates that companies licensed in CA have to abide buy - these are usually specific benefit provisions that a legislator had a preference for in the past that must be included in all policies and are not "routine" health conditions.
Yes, there could be some savings to some customers, but it just is not that big of a deal. In fact, there are many nationwide health insurers that sell in many states, having their product filed and approved there - like Aetna or Humana for example.
The biggest reason why this is not a big issue for insurers is the fact that most insurers (like a BCBS) are regional - usually within the same state. They own their providers (like Docs and Hospitals). So, if the CA Blue Cross Plan wanted to sell in, say Georgia, they'd either have to purchase Hospitals and Docs (extremely expensive) or they'd have to rent facilities there (which is more expensive than owning your own). So, for most regional plans, it is just not feasible.
This is just a talking point, in this case at least, with no real world benefit in my opinion.