Territorial health insurance plans are a carveout from the Affordable Care Act. (Getty Images)
Today’s health insurance affordability crisis is a rerun of the one Kentucky faced in the 1990s. The cause is the same. The path to relief is the same. And once again, Frankfort can deliver it.
In 1994, Frankfort enacted new controls that supporters promised would make health insurance more affordable and accessible. By 1996, the number of health insurers selling directly to consumers plummeted from 40 to two. Both of the remaining carriers requested a 28 percent premium hike.
The market’s collapse prompted the legislature to reverse course in 1996 and 1998, repealing many of the harmful regulations responsible. Eventually, the market recovered.
Twenty years later, the Affordable Care Act re-imposed substantially similar regulations. The law’s supporters promised this time would be different. Instead, Kentucky families are again facing insufficient choices and premiums they cannot pay.
The number of insurers in Kentucky’s individual market is again down to two in most counties. In five counties, there are three. In 10 counties, there is only one.
Obamacare premiums are rising faster than Congress can subsidize them. This year brought Kentucky residents a 30 percent premium hike. Insurers are planning another 19 percent premium hike for 2027.
Legislation proposed in the last session would have pulled Kentucky out of this nosedive and saved Kentuckians 60 percent or more on their health insurance.
In the 2026 session, Reps. Vanessa Grossl and T.J. Roberts filed House Bill 91. The measure aimed to free Kentucky consumers and small businesses to buy health plans from carriers in U.S. territories. Why territories? Because President Obama himself exempted territories from Obamacare’s most expensive and destructive regulations.
Leading up to Obamacare’s implementation, officials in American Samoa, Guam, the Northern Mariana Islands, Puerto Rico, and the U.S. Virgin Islands foresaw that the law would do to their insurance markets what it is now doing to Kentucky’s. They warned that “insurance issuers currently serving the individual and small group markets are likely to withdraw, making coverage unavailable at any price.” One territory’s individual market collapsed before the regulations even took effect. They begged Obama for relief.
Obama obliged. In 2014, he exempted territories from the regulations that are now tearing Kentucky’s market apart. That rule remains law today.
Permitting territorial plans in the commonwealth would allow Kentucky families to enroll in quality, affordable health plans that meet their needs. Researchers consistently find that for most consumers, premiums for Obamacare-exempt health plans are 60 percent below those for the lowest-price Obamacare plans.
The policy would have even freed millions of Kentuckians to buy coverage that respects their religious beliefs. Among the regulations from which Obama exempted territories is Obamacare’s mandate to buy coverage for contraceptives.
The only thing preventing Kentucky families and small businesses from buying territorial plans is Kentucky law. The Commonwealth’s insurance code forbids health plans unless they receive regulatory approval from the commonwealth itself. That barrier is unambiguously Frankfort’s to remove.
In effect, recognizing territorial plans applies to insurers the standard that Frankfort already applies to physicians. Kentucky law recognizes physician licenses from “another state, United States territory, or Canadian province,” if those standards “are substantially equivalent” to Kentucky’s. The fact that Obama exempted territories from Obamacare makes their standards the only standards in the United States that are substantially equivalent to what Kentucky enacted after its painful experience in the 1990s.
Expanding the market to territory plans allows Kentuckians access quality, affordable, enforceable insurance protection from established carriers, with a named regulator and an enforceable contract standing behind every policy. The law would write the licensing territory’s regulations into the insurance contract, so that Kentucky courts could enforce them.
It would also subject the insurers now operating in Kentucky’s individual market—Anthem, WellCare, and Molina—to greater competition. Aetna, Cigna, Humana, and UnitedHealthcare already do business in the territories, and have provider networks in Kentucky.
Legalizing territorial health plans would not take any choices away. Kynect would remain open for Kentuckians and carriers who prefer Obamacare plans. Consumers who qualify would still receive subsidies, which would still rise along with premiums. For Kentuckians struggling to afford coverage, the bill would simply add another option.
Frankfort does not need to wait on Congress to act. It does not need to spend a dime. It just needs to stop standing in the way of Kentuckians enjoying the same freedom to choose their coverage that citizens in U.S. territories enjoy.
This piece was also authored by Michael F. Cannon, director of health policy studies at the Cato Institute and Niklas Kleinworth, Director of the State Health Reform Initiative at the Paragon Health Institute.
Courtesy of Kentucky Lantern
