Repeal The Federal McCarran Ferguson Law

The False Political Narrative About the Sale of Health Insurance Across State Lines

FYI TO MICHIGANIANS:An abbreviated version of this was submitted to the Leelanau Enterprise for publication. Watch for it and share!


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
Cedar/ Sedona

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Jim Fuscaldo

James Fuscaldo is a retired attorney with degrees in law and science. He has a Bachelor of Science in Pharmacy from Drake University in Des Moines, Iowa, and a Juris Doctorate in Law from John Marshall Law School in Chicago, Illinois. He was employed by Broadlawns Polk County Hospital in Des Moines, Iowa; Eli Lilly and Company, Indianapolis, Indiana; Northwestern University Medical School, Chicago, Illinois, and The Dow Chemical Company, Midland, Michigan before retirement. He had been actively engaged in the following areas of the law during his 30-year legal career with The Dow Chemical Company. International Law. ( European Economic Community and Latin America) Intellectual Property Law. Commercial Business Law, including compliance with Federal Antitrust and Unfair Competition Laws. Federal Bankruptcy, Mergers and Acquisitions. Federal, Food, Drug and Cosmetic Law and compliance with Federal Trade Commission Regulations. Product liability litigation pertaining to prescription and nonprescription drugs. James served as General Counsel for Dow Chemical Latin America and General Trademark and Copyright Counsel for The Dow Chemical Company and was a member of Dow’s corporate legal management and supervisory team before retirement from Dow. In 2013, he received a Constitutional Defender Award from the Constitution Celebration Committee, and has been active in local politics in Northwest Michigan for several years. 

  5 comments for “Repeal The Federal McCarran Ferguson Law

  1. Sue Schwartz
    March 27, 2017 at 4:04 pm

    Thanks Jim--much appreciated. Maybe you can explain to us also, why Paul Ryan tormented the entire country by only submitting his, obviously written by the insurance industry bill, which contained the most despicable of NoBama care, specifically, outrageous tax credits and penalties, thereby not repealing anything. Waiting for Nobama Care to implode does not vacate the penalties or the IRS involvement of health insurance as long as this is "law". . In fact, Ryan's bill contains the same penalties which are attached to Medicare which are also wrong. We are forced to sign up for Medicare whether we want it or not and the same holds true for Medicare Part D (and Trump wonders why medicine costs so much).

    Also, I'd like to know why the issue is dead? If it was never brought for a vote--can they not simply bring the 2015 repeal bill forward, and pass it again? This was a true repeal--house votes on it, sends it to senate and then to Trump's desk. Paul Ryan needs to go--I honestly thought Trump would box his ears and was looking forward to this rumpus, and Trump wanting Ryan's bill passed when the Freedom Caucus and Rand Paul said why it wouldn't pass--no wonder we're all too sick to seek medical care.

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    • KG One
      March 27, 2017 at 9:31 pm

      What insulting here is that repealing Obamacare is really not as hard as Speaker Ryan has made it out to be.

      Especially for those of us who can read.

      Obamacare repeal bill #1.

      Obamacare repeal bill #2 (IMHO, easier of the two).

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  2. KG One
    March 28, 2017 at 6:06 am

    I've been asked to expand a bit further on my previous comments.

    Just in case anyone feels inclined on the latter, that bill number is HR-1718, which ironically was introduced last Friday.

    I'd be curious to see which members of the Michigan republican delegation would want to show their conviction on this issue by either becoming a co-sponsor or showing support for discharging it from the House Appropriations Committee?

    Those who chose not to...well, that would be very telling on where they really stand.

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  3. Jim Fuscaldo
    March 28, 2017 at 8:58 am

    Well said! We should challenge, albeit respectfully, representative Jack Bergman's position/opinion on this Bill at every opportunity. He campaigned on repealing Obamacare. It is time for him to deliver. Will the local media challenge him on this matter? What say you Michiganians of the North?

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    • Jason
      March 28, 2017 at 4:08 pm

      Been doing my part. He has heard from me in several ways.

      Sad if he misses the opportunity to push for a full repeal.

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