The False Political Narrative About the Sale of Health Insurance Across State Lines
Congress and state politicians have proselytized a false narrative about the inability to sell health insurance across state lines. The simple solution is repeal the Federal McCarran Ferguson Law. Why?
Health insurance providers in each state are protected from interstate competition by the McCarran Ferguson Act of 1945. This law grants the states the sole right to regulate health insurance within their borders. It insulates health insurers from the legal effects of the Interstate Commerce Clause of the United States Constitution. Consequently, McCarran Ferguson permits insurance companies to establish INTRASTATE insurance oligopolies or monopolies “sub silentio” by also exempting them from the Sherman and Clayton antitrust and anti-monopoly laws.
Insurance companies lobby state insurance commissioners, legislators and governors to protect their INTRASTATE oligopolies or monopolies, and when desirable for political or other economic reasons, mandate with the help of the state politicians the purchase of unnecessary insurance such as pregnancy coverage for women who are beyond child bearing age. This allows insurance companies to increase premiums for everybody even though the insured event is low risk for many within the insured pool.
Consider these insurance anomalies. About one-fourth of states require heath insurance to cover acupuncture and marriage counseling. Seven states require coverage for hair pieces and nine for hearing aids.
Prior to the passage of Obamacare, eighteen states considered laws that would allow the purchase of health insurance from an out of state provider. Only two states (Rhode Island and Wyoming) were successful. After Obamacare was passed thirteen states considered similar laws. Only three states, (Georgia, Maine and Kentucky) were successful. The twenty-six states that failed to pass legislation authorizing the purchase of health insurance from an out of state provider either failed to get their legislation out of committee; failed to get the required legislative vote, or had approved legislation vetoed by their governor. Strong evidence of the “shadow power” of the insurance industry, their lobbyists and their campaign contributions to protect their monopoly position. I would also point out that in excess of 30 states are controlled by a Republican governor and a Republican controlled legislature. Who is controlling who? Just asking?
The five states that have authorized the purchase of health insurance across state lines have had minimal participation because the health care insurers have refused to participate for a variety of reasons. My home state of Michigan, neither before nor after the passage of Obamacare, has introduced legislation to facilitate the purchase of health insurance across state lines. It confirms the “shadow power” of the Insurance establishment over a Republican governor and a Republican controlled legislature in Michigan for the past 7 years.
Excessive state insurance mandates increase insurance costs. Differing state regulations and mandates among the states cause wide variants in individual health insurance rates. The McCarran Ferguson Law lets states set their own requirements for coverage and protects state markets from competition. The recent merger and consolidation of health insurance companies is further evidence of the creation of monopoly power within the health care insurance business. Likewise, competition in medical services is being reduced by the acquisition of small regional hospitals and clinics by the larger mega hospitals and medical centers that may offer medical teaching programs and facilities to local medical schools.
Large employers (500 or more employees) who provide health insurance to their employees through a self-insurance program are exempt from state regulations. The are covered by the Federal ERISA law administered by the U.S. Department of Labor. Consequently, large employers may offer health insurance coverage and selective plans that are tailored to their employees’ needs at a significantly reduced cost to both the employer and employee, and not what a health insurance provider determines is both politically and economically expedient. Many employer self-insurance programs also offer their employees optional participation in an employer managed Health Savings Account.
THERE IS NO LAW THAT AFFIRMATIVELY BLOCKS THE SALE OF HEALTH INSURANCE ACROSS STATE LINES! What’s the solution to more competition? A simple repeal of McCarran Ferguson would open the competition for health insurance across state lines by eliminating the immunity from the legal effects of the Interstate Commerce Clause that health insurance providers have, and ultimately from the Sherman and Clayton antitrust and anti-monopoly laws. Congress must break the INTRASTATE oligopoly or monopoly power granted to health insurance providers by McCarran Ferguson. Regrettably, the Republican Party establishment is held captive by the health insurance industry and the large institutional medical care providers. Facts are stubborn things!
Jim “the Deplorable” Fuscaldo