Congress enacted the McCarran-Ferguson law to express its intention of giving states the complete regulation of insurance (Furrow et al., 2014). Insurance regulation varies from state to state. State insurance regulation is a good thing because it protects American consumers from high insurance rates, which are imposed by insurers to increase profits (Lunt, 2017). State regulatory agencies must review and approve all rates before they are applied (Lunt, 2017). In addition, through reforms such as the “continuity of care” states ensure that plan members have additional access to coverage once their plan terminates (Furrow et al., 2014). Regardless, insurance regulation law has faced scrutiny on the media with many questioning whether the federal government should take over.
It would be illegal for the federal government to take over all insurance regulation. Notably, the federal government still plays an integral role in the insurance business (Lunt, 2017). The government has provided cost-sharing subsidies to reduce insurance costs for low-income individuals (Lunt, 2017). However, these subsidies were canceled by the Trump administration (Lunt, 2017). Based on this action and the McCarran stipulations, it would be illegal for the federal government to regulate insurance. Nonetheless, the Federal government still protects insured individuals through various federal laws including the HIPAA and ADA (Furrow et al., 2014). Federal regulation is necessary for uniformity and efficiency in regulation of insurance regulation across all states.
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The HIPAA of 1996 and COBRA coverage provided important health law provisions that protected consumers from discrimination based on health status (Furrow et al., 2014). Indeed, federal approaches can be improved by offering more competent regulators that are within the premise of the law. Currently, insurance companies operating in more than one state are subject to several sets of laws (Wolfe, 2014). This makes it difficult to align business in different markets. Therefore, with one single federal regulation, insurance interstate commerce can be streamlined because companies would adhere to one set of laws (Wolfe, 2014). Competent regulators can ensure subsidies are applied effectively and ultimately reduce coverage costs to consumers.
References
Furrow, B., Greaney, T., Johnson, S., Jost, T., & Schwartz, R. (2014). Furrow, Greaney, Johnson, Jost and Schwartz' Health Law . VitalSource Bookshelf. Retrieved August 2, 2020, from https://bookshelf.vitalsource.com/#/books/9781634592567/
Lunt, A. (2017, November). Insurance Is Regulated by States, Right? International Risk Management Institute . https://www.irmi.com/articles/expert-commentary/insurance-is-regulated-by-states-right
Wolfe, J. (2014). Insurance Regulation: State vs Federal. The Insurance Institute of Kentucky , 1-15. https://iiky.org/wp-content/uploads/2015/07/Insurance_Regulation_Wolfe.pdf
