Vol. 24 Annals of Health Law 258
Our basic responsibility in interpreting the Commerce Clause is to make
certain that the power to govern intercourse among the states remains
where the Constitution placed it. That power, as held by this Court from
the beginning, is vested in the Congress, available to be exercised for the
national welfare as Congress shall deem necessary. No commercial enterprise of any kind which conducts its activities across state lines has
been held to be wholly beyond the regulatory power of Congress under
the Commerce Clause. We cannot make an exception of the business of
By this point, state regulation of insurance was widely accepted and the
industry’s reaction to the decision was largely negative.42
Congress responded to South-Eastern by enacting the McCarran-Ferguson Act one year later.43 The Act exempted the “business of insurance” from federal regulation, and permitted states to mandate certain regulatory requirements.44 Federal law would only supersede state law where it
directly related to the business of insurance.45 In the same year, Congress
enacted the Public Health Services Act (“PHSA”), which declared that
states are the primary enforcement authority over health insurance issuers.46
Few authorities question the basic assumption that states are the primary
regulators of insurance. Nevertheless, the history of insurance regulation
has been marked by ongoing federal-state tensions.47 The federal government’s role in health insurance became more complex when it became a
payer in 1965 through the creation of the Medicare and Medicaid pro-
grams.48 As a result, both state and federal government heavily regulate in-
surance.49 At the state level, this regulation manifests in part through the
41. United States v. South-Eastern Underwriters Ass’n, 322 U.S. 533, 552–53 (1944).
42. See BAKER, supra note 30, at 654 (noting that the “decision was viewed as an assault on state regulatory and tax authority over the industry”).
43. See McCarran-Ferguson Act, 15 U.S. C. A. § 1011 (West, WestlawNext current
through P.L. 113-180).
44. BAKER, supra note 30, at 654.
46. Public Health Services Act, 42 U.S. C. A. § 300gg-22(a)(1) (West, WestlawNext current through P.L. 113-180).
47. Susan Randall, Insurance Regulation in the United States: Regulatory Federalism
and the National Association of Insurance Commissioners, 26 FLA. ST. U. L. REV. 625, 626
48. See Social Security Act, 42 U.S. C. A. § 1396b(a) (West, WestlawNext current
through P.L. 113-180 (explaining how the government shall pay the states with Medicare
and Medicaid plans).
49. At the federal level, the Employee Retirement and Income Security Act (ERISA),
Pub. L. No. 93-406, 88 Stat. 829 (codified as amended in scattered sections of 26 and 29
U.S. C.), preempts most state laws that regulate private employee benefit agreements, and it
expressly preempts state law remedies. See Brendan S. Maher, Thoughts on the Latest Battles over ERISA’s Remedies, 30 HOFSTRA LAB. & EMP. L.J. 339, 353 (2013). ERISA governs
“employee welfare benefit plans,” which include plans established by employers for the pur-