As things stand now, the behavior of the insurance company is governed by the state in which the policy holder resides. Under the “across state lines” plans, the behavior of the insurance company would be governed by the state where the insurance company is located.
So let’s say that Texas has very loose insurance regulations, and New York has very tough regulations. New York makes sure that insurance companies have to pay out on claims that are made, while Texas allows the insurance companies to come up with excuses for not paying. Thus, Texas policy will be much more profitable for the insurance company than New York.
Now, New York is a very big market, so the insurance company does not want to walk away from that business altogether. It will set its rates so they fit with the actuarial conditions in New York. But if Aetna were now able to sell insurance to people in New York from its Aetna Texas subsidiary, why would they continue to sell policies from its Aetna New York subsidiary?