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The Most Overlooked Factor In Healthcare Reform: State versus Federal Regulation of Insurance

For months, Congress has been debating health care reform proposals that would have the effect of dealing a heavy blow to the system of state-by-state insurance regulation.  State governments have stood by, silently.  I’ve been wondering (here, here and here) when the states would start to raise objections.

Slowly, it’s starting to happen.  What has been a mostly overlooked factor in the health care reform debate may end up being one of the most important.

In fourteen states, legislators are trying to pass constitutional amendments that would ban health insurance mandates.  Meanwhile, a bi-partisan group of governors are objecting to provisions of the Baucus plan that would leave the cost of expanding Medicaid to the states (by contrast, the House bill provides federal money for this).  It’s an emerging trend that may reflect growing unease in state governments.

So far, most of the attention on the reform story has been focused on things like the “public option.”  But the reform proposals represent perhaps the most important change in American insurance regulation since World War 2.  Our state-by-state system has been built over the better part of a century.  Whatever the public policy rationales for this system, will it be dismantled in the course of only a few months and without objection by the regulators?

I don’t think we’ve heard the last of the state regulators.

*This blog post was originally published at See First Blog*


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