The Current Status of State
and Federal Regulation
Patricia A. Butler
Although government regulation of health care is no longer as active as it was in the 1970s and early 1980s, states continue their traditional roles in licensing providers (practitioners and institutions) and insurers. As health insurance has moved from an indemnity model to managed care, insurance regulation has evolved to oversee not only plan solvency but also the availability and accessibility of promised care. And as managed care organizations have moved from traditional health maintenance organizations (HMOs) to a variety of integrated provider arrangements, many of which bear insurance risk, states have had to develop policy to define and oversee these new types of health plans.
The federal government has traditionally played a limited role in regulating health care providers and insurers. But through its function as a purchaser of Medicare services, it has set provider standards (for example, for hospitals and laboratories) that have influenced the broader health care environment. And this influence will continue with Medicare's emphasis on enrolling its beneficiaries in managed care organizations. Recently, Congress also developed standards for insurance market practices—the customary province of states—in enacting the Health Insurance Portability and Accessibility Act of 1996 (HIPAA).