Does the federal government have the right to set minimum insurance policy standards?

[Wardendresden]

This is a parallel argument regarding how STATES, not the Federal government, regulates property-casualty insurance and which negatively impacts the premiums you are charged. I worked in the insurance industry for over 30 years doing everything from personal lines underwriter, to ratemaker (actuarial work), to product development and as a compliance officer.

Every state sets their own minimum liability limits. Some have "no-fault" insurance, others utilize medical payments coverage. Underwriting guideline criteria in each state is separate from other states. Uninsured motorist coverage and/or underinsured motorist clauses (which some states have and others do not) all make for a myriad of different forms, creates whole departments in each insurance company to keep track of the changes, and requires constant modification.

Somewhere in the early eighties there were 700 new insurance laws in the 51 states each year. By the mid-nineties there were over 7000 new insurance laws every year.

It's most likely easier now, but when I was in the business we had entire storage rooms full of forms that had to be attached to each "basic" policy depending on which state it was insured in. The "basic" policy itself frequently had to be changed by amendment to fit the statutory laws in a few states.

The cost for all that work is astronomical and is a part of your premium. The FEDERAL law came into play when a person from Texas drives into Massachusetts and has an accident there. Suddenly your Texas policy is modified to meet the minimum requirements of Massachusetts. If you drive from a liability state to a no-fault state, even though you didn't pay for the no-fault coverage, insurance companies have to give you the minimum state no-fault coverage.

It's very expensive. If there were simply ONE insurance law impacting all the states it would be much less expensive for property-casualty companies to operate. One minimum limits standard, one no-fault (or rejection of no-fault), one uninsured and/or underinsured motorist coverage form--all of this would make for a much more simple P-C insurance scheme. Auto is more diverse than homeowners, but even homeowners has many different forms that must be attached depending on the state of occupancy.

I find it hard to believe that some commonality in the health insurance field would fail to provide benefits that certainly would occur in the P-C field.

So people may wish to complain about can the Federal government regulate this or that, but the fact is, you are paying through your nose because it does NOT regulate the P-C industry which most of us insiders felt would make doing business much easier. So protect your freedom, but know that the cost isn't in blood, it's in cold hard cash.

P.S. Yesterday's Dallas newspaper had a front page article about Farmers' Insurance settling with the state of Texas for an estimated 117 million dollars for excluding coverages in its homeowners policies that are required under Texas statutes. One of the reasons I left the industry in 2002 was because I was under increasing pressure from upper management to rule as "okay" certain practices in states that were considered illegal. They wanted a head to lop off if they got caught. I took my head off the block and refused to bow to cajoling and veiled threats by upper management. My experience is that over that last twenty years the words "integrity" and "insurance company" should rarely be used in the same line.

My guess is Farmers made half a billion off their improper policies and claims denials, so the 117 million is just a cost of doing business.

[markg91359]

The court only addressed the individual mandate and the Medicaid expansion. The individual mandate is no different than the home interest deduction or child deductions. However, I am asking about the ability of the federal government to set minimum policy guidelines.

I know that is what you are asking and the answer is the same. Congress can use its power to tax to do regulate insurance companies and pretty much anything else that it wishes. NFIB v. Sebelius may have specifically addressed the individual mandate and Medicaid expansion. However, Congress's powers allow it to do this as well.

[Delahanty]

No, I don't believe they have the right to set minimum standards. Also, I'm sick of the sheeple on TV, radio, etc. buying the baloney that they should be happy their policy was canceled, and can now "shop" for a better one, because the very fact that it was cheap means that it was deficient. That's all you're hearing now from Obama and his hacks--that cheap policy "didn't cover enough." I choose to believe the subscribers, themselves, who say they'd found policies that covered what they wanted them to cover, and which included hospitalization. Is the administration set to say the same thing about employer-provided plans, many of which are cheap (or free), and which are considered to be Cadillac plans, when they start being compromised?

Sorry, Mr. President, regardless of what Chris Rock thinks, you're not my boss; I'm yours. And I don't want your "affordable" health care any more than I'd want the gub-ment's "affordable" housing.

[lycos679]

Originally Posted by markg91359

I know that is what you are asking and the answer is the same. Congress can use its power to tax to do regulate insurance companies and pretty much anything else that it wishes. NFIB v. Sebelius may have specifically addressed the individual mandate and Medicaid expansion. However, Congress's powers allow it to do this as well.

I'm sorry, but I think that is false. Congress gets the power to regulate through the commerce clause, not through the taxation powers. Now it could be the case that insurance companies affect interstate commerce, which is sort of what I'm asking, but not what you are claiming. What does seem clear though, is that Congress cannot regulate something that does not cross state lines and does not have a significant impact on interstate commerce.

Here are a few cases related to the commerce clause and if you notice, not a single case mentioned any regulation power stemming from taxation authority. The first set of cases seem to imply that Congress does not have the power to regulate insurance companies that don't cross state lines, but the second set of cases seem to imply the opposite if health insurance affects interstate commerce. The issue, at least to me, is not clear, but that is why this question is in Great Debates.

Commerce Clause – The Commerce Power of Congress

In The Daniel Ball (1871), Congress passed an Act in 1838 prohibiting the operation of steam ships on the internal navigable waters of the United States without a license. The Daniel Ball was fined $500 for operating without the license. The Supreme Court held that Congress has the power to regulate the intrastate transport of goods if those goods are bound for or originated from another state.


In Hammer v. Dagenhart (1918), Congress passed the Child Labor Act in an attempt to combat the use of child labor in factories. The Supreme Court held that Congress did not have the power under the Commerce Clause to regulate goods produced through child labor and transported in interstate commerce. The Court held that manufacture is not commerce and the exclusion of goods was permitted only when it involved the nature of the goods themselves, not the manner in which they were made.



In United States v. Lopez (1995), Congress enacted the Gun-Free School Zones Act of 1990 (GFSZA) prohibiting the possession of firearms in school zones. Lopez brought a loaded handgun to school and was charged under the Act. The Supreme Court held that the commerce power only grants Congress the ability to regulate the use of the channels and instrumentalities of interstate commerce, and other activities having a substantial relation to or a substantial effect on interstate commerce. The Act was held to unconstitutional for exceeding the power of Congress under the Commerce Clause.

In NLRB v. Jones & Laughlin Steel Corp. (1937), Congress enacted the National Labor Relations Act of 1935 which prohibited unfair labor practices affecting interstate commerce. Jones & Laughlin Steel was charged under the Act for allegedly discriminating against union members. The Supreme Court held that Congress has the power to regulate manufacturing activities that have a significant effect on interstate commerce, including activities that burden interstate commerce or its free flow.

In United States v. Darby Lumber Co. (1941), Congress passed the Fair Labor Standards Act of 1938 establishing a minimum wage and maximum hours for employees involved in producing goods for interstate commerce. Darby was charged under the Act and challenged the law on the grounds that the regulation of in-state manufacturing activity was unconstitutional for exceeding Congress’s authority under the Commerce Clause. The Supreme Court upheld the statute, holding that Congress can exclude from interstate commerce articles which deteriorate the health, welfare, and morals of the nation. Congress may apply its own vision of public policy in excluding articles even though the state in which the goods are produced has not deemed it necessary to regulate their use.

In Wickard v. Filburn (1942), Congress set quotas on wheat production through the Agriculture Adjustment Act. Wickard exceeded his quota when the amount of wheat produced for his own use was included with the amount he sold. The Supreme Court held that Congress has the power to regulate local intrastate activities, such as the production of wheat for personal use, if they have an aggregate effect on interstate commerce.

In Katzenbach v. McClung (1964), Congress passed the Civil Rights Act of 1964 which prohibited race based discrimination by restaurants serving food obtained through interstate commerce. The Supreme Court held that Congress can regulate business activity that is purely local, if any part of the activity affects interstate commerce, if the aggregate activity has a substantial effect on interstate commerce.