Do State Governments Have the Authority to Enforce ObamaCare's Insurance Regulations?


As part of the new health care law, state governments are expected to enforce a host of federally defined regulations on health insurers. Just one problem: It seems that a number of states do not have the authority to enforce those regulations.

Insurance commissioners in about half the

State-level confusion!

states say they do not have clear authority to enforce consumer protection standards that take effect next month.       

Federal and state officials are searching for ways to plug the gap. Otherwise, they say, the ability of consumers to secure the benefits of the new law could vary widely, depending on where they live.       

…States have the primary role in enforcing many of the new standards. If a state fails to enforce a standard, the federal government will step in to do so — as it did in several states after passage of a health insurance law in 1996.       

The federal government recently surveyed states to assess their enforcement capabilities, and the results suggest a patchwork of protections.       

California, Florida, Hawaii, Michigan, Nebraska, Oklahoma, Virginia and Wyoming, among other states, said they did not have authority to enforce federal law.       

The National Association of Insurance Commissioners is playing this down, arguing that even states that lack explicit authority to enforce the new regulations can use related powers to coax insurers into following the new rules. In a letter to the Department of Health and Human Services, the NAIC wrote that "almost all states can use their form approval process, investigative powers, and/or market conduct exam authority to hold licensed insurers accountable for their compliance with the federal laws. This, combined with coordinated enforcement by the federal regulators, should be sufficient to ensure carriers comply with the new requirements." But notice the hedging: It's not all states, but almost all states. And those existing powers will only be sufficient in combination with federal enforcement. In other words, a number of states do not have the necessary powers to enforce the rules that the new health care law instructs them to enforce.

This is potentially a big problem for backers of the law. According to Roger Pilon, the Cato Institute's Vice President for Legal Affairs, it makes the state-led lawsuits challenging ObamaCare more somewhat likely to succeed. "If the federal government orders states to do things that the states are not authorized to do, then you've got a problem," he says. If states are limited by their own constitutions from performing as expected under the health care law, Pilon argues, that presents added legal complications for defenders of the new health care law. Now, the end result may be that the federal government enforces those provisions where the individual states do not have the authority. "This isn't a lethal impediment for ObamaCare," says Pilon. "But it raises one more aspect of the uncomfortable federalism that surrounds the law."

And even if it survives legal challenge, the potential for federal/state conflicts is almost certain to create a giant implementation headache. "It's easy to say that federal rules will preempt conflicting state rules under the Constitution's Supremacy Clause," Pilon says, "but what if state rules are more onerous for insurers than federal rules? Which rules then apply? Does federal law create a ceiling, or just a floor?" Add this to the list of the PPACA's complications and design flaws. There's a lot we still don't know about how the law will play out, but we can be pretty sure at this point that however it goes, it will be a mess.

NEXT: Mosque On the Hudson: Will the Next Beer at the White House Be Alcohol-Free?

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. Once in a while I find myself almost missing the 80s. Then I'm reminded that even vets like The Kinks fell victim to those garish colors and horribles fonts.

    1. I miss Pop-up Videos. It was a very informative program.

  2. As part of the new health care law, state governments are expected to enforce a host of federal government regulations on health insurers.

    Wait a minute. I thought states enforcing federal law was unconstitutional.

    1. My understanding is that, under the PPACA, the states are required to set up insurance exchanges that meet federally defined standards, which I assume is different than enforcing federal law. Changed the wording of that sentence slightly to reflect this.

      1. "under the PPACA, the states are required to set up insurance exchanges that meet federally defined standards"

        And that is constitutional how?

        1. Come on John, Commerce Clause. No need to really understand it. Just repeat the words. 😉

          I expect that some day, there will be a real movement toward nationalization. States will not be sovereign. I think it will be a cost cutting move to reduce the expense of redunant government. As the fed grows, there will be little need for state governments as we know them.

        2. I believe the states can opt out of the insurance exchange. Otherwise, I'm pretty sure it would be unconstitutional.

    2. "States enforcing federal laws," as a general proposition, is not in itself automatically unconstitutional. The problem is "states enforcing federal laws" is a very broad, general statement.

      The SCOTUS issued a decision several years ago regarding unfunded mandates basically saying the federal gubmint could not tell states how to spend their own money, or require states to dedicate state resources to performing federal functions.

      But the feds can provide funding for programs and direct the states how to set up those programs for spending those fed funds.

  3. So the states don't have the authority to enforce immigration laws but they do have the authority to enforce federal healthcare laws?

    1. They're only authorized to enforce the good laws, not the bad ones. It's in the Living Constitution.

      1. Only liberal sacred cows are sacred.

    2. Different laws; different parts of the Constitution; different facets of the notion of federalism.

      ...will be the argument.

    3. ""So the states don't have the authority to enforce immigration laws but they do have the authority to enforce federal healthcare laws?""

      So does that mean you want the states to enforce healthcare laws, or do you want the states to stop enforcing immigration law?

    4. A conundrum for both sides?

      1. Not really. Because the pro immigration side is asking that states be allowed to enforce immigration laws if they so choose. Obamacare is forcing them to do so. Obamacare would be like passing a federal law making every state and local cop enforce immigration laws whether they want to or not. That is a big difference from teh Arizona law.

  4. If only BP could come up with a containment cap for Obamas mouth!


    1. Good one, bot.

      1. He's becoming self-aware. The singularity is near.

    2. Suggy Wow is definitely the bot that rocks.

  5. So the Fed is insisting that the states enforce federal laws, and in SB 1070 the Fed is insisting that the state NOT enforce federal laws?

    Have I gotten that right?

    1. The Left is entirely a utilitarian movement. Whatever argument works in a particular situation is what they will use. They do not care one whit about internal consistancy.

  6. What is there to think about?

    All federal law is equal, but some laws are more equal than others.

    Obamacare is more equal than immigration law.

  7. There's only one corner of the universe you can be sure of improving, and that's your own self.

  8. All endings are beginnings, we just don't know it at the time.-Mitch Albom

Please to post comments

Comments are closed.