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Why Buying Insurance Across State Lines is Stupid

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Ezra Klein points out the (very) obvious flaw in the Republican's major contribution to ideas for health care reform, namely allowing people to buy insurance from out of state:

The industry would put its money into buying the legislature of a
small, conservative, economically depressed state. The deal would be
simple: Let us write the regulations and we'll bring thousands of jobs
and lots of tax dollars to you. Someone will take it. The result will
be an uncommonly tiny legislature in an uncommonly small state that
answers to an uncommonly conservative electorate that will decide what
insurance will look like for the rest of the nation.

This is exactly what the credit card industry did with obvious results. Writes Klein:

(The Credit Card industry) is regulated in accordance with conservative wishes. In 1980, Bill
Janklow, the governor of South Dakota, made a deal with Citibank: If
Citibank would move its credit card business to South Dakota, the
governor would literally let Citibank write South Dakota's credit card
regulations. You can read Janklow's recollections of the pact here.
Citibank wrote an absurdly pro-credit card law, the legislature
passed it, and soon all the credit card companies were heading to South