The previous two sections considered the issue of state versus federal regulation. That is, should the business of insurance be regulated by the states or by the federal government? As a general conclusion, the case for state insurance regulation is a strong one. The system already exists. It is capable of experimentation, change and vitality. Being closer to the people, it tends to be more responsive. Under the framework of the McCarran Act, it is uniquely accountable, hence more responsive to the insurance consuming public’s needs. But, most important, state regulation is more consistent with the fundamental concept of federalism.

Nevertheless, state (or federal) regulation is not an end in itself. Its justification depends upon meeting insurance regulatory goals in a manner consistent with other goals of public policy. Presumably no one would contend that the state insurance regulatory is perfect or even near perfect in doing so. However, the history of federal regulatory efforts reveals a considerable lack of perfection at that level as well. Thus, the issue is not whether there are problems with the state regulatory mechanism (there are), but rather whether there is convincing reason to conclude that federal intervention will help solve such problems without causing new and perhaps even worse problems.

Comparing an ongoing active state insurance regulatory mechanism to an idealized phantom federal insurance regulatory model, which never has and never will exist in an idealized form, contributes little to a constructive resolution of problems. Unless for a particular problem a national solution possesses significant advantages over a state solution, we should leave alone an ongoing and moderately successful regulatory regime and concentrate efforts on making improvements at the state level.