In order to sell insurance (basically any type) to people in say New York, you need the to follow the insurance laws of that state. This will have all sorts of

In order to sell insurance (basically any type) to people in say New York, you need the to follow the insurance laws of that state. This will have all sorts of weird paperwork and rules that are different from any other state in the country. Having to jump through all those hoops will mean you need a few dozen employees minimum dedicated to compliance in that state etc. But we can overcome that by having the federal government regulate interstate insurance, likely making these companies only needing to comply to the rules of their home state, or by having states set up agreements to allow out of state insurers sell under the rules of the other state. Only a few states currently do that. Even then nobody is using this ability to sell health insurance interstate. And the reason why is: You also need to develop a network in the other state, which can be a significant factor in costs. There is no way that you will get hospitals and doctors offices in New York to accept the same small amounts that you can get hospitals and doctors offices to accept in some low cost of living flyover state. Of course if you do agree to the higher prices that New York providers would charge, well now your average costs have shot up, so you need to raise your rates, making your cheap insurance not as cheap anymore.