Why We Can't Buy Healthcare Insurance Across State Lines.. The McCarran–Ferguson Act was passed by the 79th Congress in 1945

Hello all,

Rahthrae found this information and I am posting this for all to understand why we can not buy healthcare insurance across state lines, like we are able to do with car insurance, homeowners insurance, etc. Take note of when this was passed and who was president! 

Why can't congress put forth a bill to do away with The McCarran–Ferguson Act alone without adding anything else to it? Why don't they? I think we all know the answer to that question. 

In February 2010, the House of Representatives voted 406-19 to repeal the McCarran–Ferguson Act with regard to health insurance.

They did this in 2010 when there would be no consequences because they knew Obama would not sign it! 

The McCarran–Ferguson Act, 15 U.S.C. §§ 1011-1015, is a United States federal law that exempts the business of insurance from most federal regulation, including federal antitrust laws to a limited extent. The McCarran–Ferguson Act was passed by the 79th Congress in 1945 after the Supreme Court ruled in United States v. South-Eastern Underwriters Association that the federal government could regulate insurance companies under the authority of the Commerce Clause in the U.S. Constitution and that the federal antitrust laws applied to the insurance industry.

The Act was sponsored by Senators Pat McCarran (D-Nev.) and Homer Ferguson (R-Mich.).


The McCarran–Ferguson Act does not itself regulate insurance, nor does it mandate that states regulate insurance. It provides that "Acts of Congress" which do not expressly purport to regulate the "business of insurance" will not preempt state laws or regulations that regulate the "business of insurance."[1]

The Act also provides that federal antitrust laws will not apply to the "business of insurance" as long as the state regulates in that area, but federal anti-trust laws will apply in cases of boycottcoercion, and intimidation. By contrast, most other federal laws will not apply to insurance whether the states regulate in that area or not.[2]


In 1942, at the request of the Attorney General of Missouri (whose insurance regulators felt powerless to correct abuses they had identified since 1922),[3] the Department of Justice investigated and a grand jury in Georgia indicted the South-Eastern Underwriters Association, 27of its officers and 198 member companies.[4] The indictment charged the defendants with two counts of antitrust violations: (1) conspiracy under Section 1 of the Sherman Act to fix the premium rates on certain fire insurance policies and boycott non-complying independent sales agencies that did not comply; and (2) monopolization of markets for the sale of fire insurance policies in the states of Alabama, Florida, Georgia, North Carolina, South Carolina, and Virginia in violation of Section 2 of the Sherman Act. The district court sustained the defendants' demurrer and dismissed the indictment, holding that "the business of insurance is not commerce, either intrastate or interstate" and that it "is not interstate commerce or interstate trade, though it might be considered a trade subject to local laws either State or Federal, where the commerce clause is not the authority relied upon."[5] In January 1955 the Supreme Court heard arguments on the prosecutors' appeal from the district court.

The question in the case, as formulated by the Court itself, was "whether the Commerce Clause grants to Congress the power to regulate insurance transactions stretching across state lines." For nearly 80 years before then, the Supreme Court had consistently held that "Issuing a policy of insurance is not a transaction of commerce,”[6] "the business of insurance is not commerce,"[7] and "contracts of insurance are not commerce at all, neither state nor interstate."[8] Those cases, however, dealt with the negative implications of the Commerce Clause, i.e., whether the business was "interstate commerce" such that it could not be regulated by the individual states.[9] TheSouth-Eastern Underwriters case, however, involved the question whether the business of insurance was "interstate commerce" sufficient to allow Congressional regulation. The Supreme Court in United States v. South-Eastern Underwriters Association, 322 U.S. 533 (1944), 4-3 decision written by Justice [Hugo Black]], reversed the district court, holding that (1) the Sherman Act intended to cover the alleged acts of monopolization; and (2) that the transaction of insurance across state lines was "commerce among the states" which the Constitution permitted Congress to regulate.

The three judges who dissented did so for separate reasons. Chief Justice Stone argued that the writing of insurance in one state to cover risk in anoter was not "interstate commerce" as a constitutional matter and that the actions charged were not within the purview of the Sherman Act. His opinion was largely based on the previous decision of the Court on the negative implications of the Commerce Clause.[10] Justice Jackson, in addition to concurring with the Chief Justice, urged the impracticality of allowing both state and federal regulation of insurance and given the precedent believed that it should be done by the states, at least absent a specific declaration by Congress.[11] Justice Frankfurter allowed that Congress's power under the Commerce Clause reached these actions but argued that the Sherman Act was not an express warrant that Congress intended to enter this area of commerce.[12]

Legislative history[edit]

Since the Paul case in 1868,[6] it had been widely believed that the federal government was excluded from regulating the insurance industry.[13] Before the South-Eastern Underwriters Association case, "insurance already was one of the most highly regulated industries in the American economy," with every state having an insurance department and detailed laws on protection of policy holders in case of insolvency.[14] But regulation of other aspects of iinsurance varied widely among the states.[15]. The prospect of a federal take-over of insurance regulation, alarmed state regulators and thirty five states had filed amicus curiae briefs supporting the decision of the district court.[16] State insurance regulators and insurance executives complained to Congress that the decision would upset the extensive system of state regulation and taxation (as Justice Jackson had warned), even though Attorney General Biddle denied any such intent.[17]

In response to this decision, on March 9, 1945, the ongress passed the McCarran–Ferguson Act, which, among other things:

  • partially exempts insurance companies from the federal anti-trust legislation that applies to most businesses[18]
  • allows states to regulate insurance
  • allows states to establish mandatory licensing requirements
  • preserves certain state laws of insurance.

Significance to U.S. health care reform in the 21st century[edit]

One aspect of Republican proposals for healthcare reform in the United States is allowing interstate competition for health insurance, potentially requiring modification of the McCarran–Ferguson Act.[19] In February 2010, the House of Representatives voted 406-19 to repeal the McCarran–Ferguson Act with regard to health insurance.[20]


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Good background.  Thanks.

Most welcome, JB! :)

Rahth also found this! 


Updated: 2/3/2017

Richard Cauchi, NCSL Health Program

A State Implementation Report

Insurance firms in each state are protected from interstate competition by the federal McCarran-Ferguson Act (1945), which grants states the right to regulate health plans within their borders. Large employers who self-insure are exempt from these state regulations. The result has been a patchwork of 50 different sets of state regulations; the cost for an insurer licensed in one state to enter another state market is often high. A growing number of state legislators are interested in whether some states allow or facilitate the purchase of health insurance across state boundaries or from out-of-state regulated companies. NCSL's state health insurance research and tracking shows a gradually growing number of states (at least 21 as of December 2016) and state legislators considering this idea during the past eight years and continuing to the  present (listed below).  

Note that “self-insured” or “self-funded” health coverage usually offered by large employers (especially with 500+ employees) is not regulated by states and is guided by the federal ERISA law, administered by the U.S. Department of Labor.

Federally authorized “health savings accounts” and accompanying High Deductible Health Policies (HDHPs) are exempt from much of state regulation, including some state mandates.

Origins and history:  All 50 states regulate health insurance and have done so for decades. While laws vary from state to state, they generally provide a structure that combines business regulation, employer incentives and consumer protections and obligations.  The variations can be extensive, especially affecting mandates or required benefits.

State Laws Allowing Outof-State Sales of Health Policies

  • Rhode Island was the first state to pass an out-of-state purchasing law, signed in 2008, to create a regional health insurance compact, similar to the design later authorized by the PPACA in 2010.
  • Wyoming was the first state, in March 2010, to enact a signed law based on the free-market model but also including a multi-state compact related to federal health reform.
  • Georgia, HB 47 - Signed into law May 2011, in the first state with a law drafted and passed since the federal Affordable Care Act became law. 
  • Kentucky (HB 265 - Signed into law, 2012).
  • Maine (HB 979 - Signed into law2011; effective date Jan.1, 2014). 

In Arizona a bill passed the House and Senate in 2011 but was vetoed by the governor and did not become law.

State-based proposals for out-of-state health purchases before federal health reform:  Eighteen states considered laws to allow this policy prior to health reform; of those, 14 states had cross-border health insurance bills filed in the 2008-2010 sessions.  In most cases, the proposed state laws differ markedly from the newly enacted federal health reform law. 

  • Arizona (HB 2776 of 2008 - did not pass committee)
  • California (AB 1904, SB 65 of 2010 - did not pass committee)
  • Colorado (HB 08-1327 of 2008, HB 09-1256 of 2009; HB 10-1163 of 2010 - did not pass committee)  
  • Georgia (SB 309, S 407, HB 1184 of 2010 - did not pass) - See post-ACA enacted law in 2011
  • Indiana (HB 1152 of 2010; H 1013 of 2013 - did not pass)
  • Maine (SB 540 of 2007, HB 230 of 2009 - did not pass committees) - See post-ACA enacted law in 2011
  • Minnesota (HF 3609, HF 4154, HF 4218, HF 4229, SF 3582, SF 3824 - did not pass)
  • New Hampshire (HB 1431, HB 1585, SB 452 of 2010 - did not pass)
  • North Carolina (2009-2010 - did not pass)
  • Oklahoma (SB 1290, SB 1346, SB 2 of 2010 - did not pass) 
  • Pennsylvania (SB 508 of 2009-2010)
  • Rhode Island (SB 2286 - Signed into law, 2008)
  • South Carolina (SB 986 of 2010 - did not pass)
  • Virginia (HB 31 of 2010 - did not pass)
  • Vermont (HB 697 of 2010 - did not pass; also resolution HJR 39 expressing opposition to out-of-state purchasing - adopted)
  • Washington - study provision only, passed 2008.  No further action was taken.
  • Wisconsin (AB 540 of 2009-2010 - did not pass)
  • Wyoming (HB 128 - Signed into law, 2010)

Interesting, very interesting. Thanks

Why can't congress put forth a bill to do away with The McCarran–Ferguson Act alone without adding anything else to it?

Good question.

They can, and they have, only I believe Obama vetoed that bill.  But there is nothing stopping them from doing it again, and again and again.  Except, there is obviously, or maybe not so obviously some money in someone's pocket would have to go missing, and we all know there isn't one corrupt politician willing to let go of the dough.

There is also a paradigm at work here that applies to basic human psychology. 

1. I am happy. I like normal: it is comforting and I don't have to think too hard about it. 

2. I am suspicious of change especially if I don't understand it or I disagree with it.

3. I can adapt to most changes but I don't like to make adjustments that I don't understand or I don't agree with. 

4. Time helps my adaptation become my new normal.  I am happy.

Repeat steps 1-4.

So we go from personal freedom to government guidance, direction and permission.  How difficult will it be to return to personal freedom?

We go from personal reliance to group support.  How difficult is it to return to self reliance?

We go from personal responsibility to group assigned responsibility.  How difficult is it to return to personal responsibility?

That's certainly one paradigm that's taking place here in our Republic and around the globe, but it's basically a new one compared to the "Normalcy Bias" paradigm that got Americans to the point where your paradigm took over.  For those who aren't familiar with "Normalcy Bias":  It is the false continual belief that no matter how bad things get, life will always get back to normal.  Americans fell into the normalcy bias because for years through the Civil War, both world wars, Vietnam, through the great depression and several recessions, things always seemed to come back to normal.  So you see, the "normalcy bias" paradigm is a naturally occurring paradigm change or shift, because we couldn't see it happening.  JeansBrother, has an excellent description of an engineered paradigm change.  Because the elites/subversives/Communists/Marxists and now the Liberal Leaders have been observing the "Normalcy Bias", they have been seizing, for many years now, the opportunity to manipulate our America's dependency on the normal.  For the sole intention of order and to control the people by convincing/forcing us all to accept their ideology of a new normal.  Hence the paradigm in JeansBrother's post.  Well said JB, it's good for all of us to really read your post and contemplate what it says.

Subconsciously I may have been restating something that I read when I was 16, in the Communist Manifesto by Karl Marx.  My steps 1-4 are represented by his "Thesis", "Antithesis", "Synthesis".  He was talking about economics and society while I was talking about human psychology.

Either way my friend, it was well worth reading and pondering again, and again.

Why does Congress (either house) feel obligated to operate by the rules established by previous Congresses?  Why can they not do what needs to be done to meet the requirements of the people without meeting arcane conditions that applied in the past?

How does that saying go?  "People who continue doing the same thing over and over again expecting different results are always going to be disappointed."  Or something to that effect.  Personally, it's my belief that there are very few politicians that possess the ability of "original thought".  In congress, both houses there is a serious lack of original thought, and when one does raise it's ugly head, it's usually a Progressive idea, that's another reason we are where we are.





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