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Abstract

This Article, which is the first to examine the relationship between the ACA’s insurance market reforms and state regulation of insurance, argues that states’ decisions to forego creating their own exchanges may mark the beginning of an important shift of regulatory authority from the states to the federal government. It begins by sketching the historical antecedents of the current allocation of state and federal authority over insurance regulation. The aim of this discussion is to highlight the unique role states play in the regulation of insurance as opposed to other financial products. Part III explains the pre-ACA structure of health insurance regulation. It discusses both the objectives of health insurance regulation and the substantive and institutional frameworks states have evolved to meet those objectives. Part III also explains the reasons why states are well suited to regulate health insurance. Before turning to the regulatory structure introduced by President Obama’s health reforms, Part IV explains the federal government’s involvement in health plan regulation before the ACA. Part V details the relevant ACA provisions, explaining the new rules that will apply to health plans and carriers. It pays special attention to the application of these rules—some apply to all health plans, regardless of how they are sold, while others apply only to plans sold through the exchanges. These latter rules are particularly important to this Article’s analysis, as they represent the regulatory functions that the federal government will assume—via its exchange—in states that elect not to create exchanges. Part VI explores the effect the ACA’s exchange rules will have on the balance of state and federal regulatory authority, and highlights how the opt-in character of the exchanges will alter this balance. Lastly, it offers observations about the impact increased federal regulation of health insurance may have on the regulation of other lines of insurance.

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