Federal Regulation of Insurance

My apologies for another wonky health insurance post hot on the heels of the last one, but when there’s a major newspaper op ed on a subject I’ve been ranting about for years I can’t resist…

In today’s Wall Street Journal, Congressman Ed Royce (R., Calif) makes the case for federal regulation of the insurance industry:

Because of a Supreme Court decision nearly 140 years ago, the states have sole regulatory authority of insurance. What has resulted since is a bureaucratic cluster of 51 different regulators (every state, plus the District of Columbia) overseeing their individual jurisdictions, punishing American consumers and insurance providers alike.

At Fractured Atlas we’re living this nightmare every day. Mainly it affects our health care program. Despite our community of over 52,000 arts professionals nationwide, we’re forced to fragment our group into 51 sub-groups. This seriously undermines our negotiating leverage with insurance companies. We also have to wrestle with 51 different health insurance regulatory agencies, which I promise is neither easy nor fun.

The most common justification for state-based insurance regulation is that the state insurance departments are the best providers of consumer protections. In truth, some states get it very right, others get it very wrong, and most are somewhere in between. There’s no reason to believe, however, that federal regulators can’t enact their own adequate consumer protections. And a simplified and streamlined regulatory environment would facilitate much greater competition than currently exists in the market for private insurance, which can only benefit consumers.