One day in 1984 the English manager of an insurance company in Spain newly acquired by a US firm showed up at my office in our embassy in Madrid. He was in a panic. The US company had purchased the Spanish firm in order to do business in the country. However, when he turned up to claim the firm’s seat in the “Colegio de Asegadores” (College of Insurers), which was required to do business in Spain, he was told that a US firm could not hold the seat and operate in Spain. Of course he argued that the Spanish firm would be doing the business in Spain as a Spanish firm. The “Colegio” rejected his argunment, but did say that if he could get the US Embassy to send a letter to them stating that a Spanish firm could do insurance business in the USA, they would give him the firm’s seat.

I looked at the panicky manager and said two things. First, I would give him a letter that I doubted would do the job since I was sure the “Colegio” would come up with another ruse. Second, I would do the letter on condition that he told no one else in the embassy what I was doing. He asked why and I replied that, if anyone else in the mission got wind of the matter, I would have to get Washington’s approval for the action which would have taken months, if not years. I then wrote out a letter on my typewriter and handed it to him. He asked if he could have his lawyers review it. I said I didn’t care who he had read it, as long as he did not show it to anyone else at the embassy.

A few weeks later the manager came back with the letter. Not only had his local lawyers reviewed it, but they sent it to the regional headquarters in England, which sent it on to the home office in Annapolis, Maryland. The home office asked to add one line to the letter which I readily accepted, since the line told me that the home office understood what I was doing. I had the letter typed on embassy letterhead, signed it and handed to the manager who was immediately off to the “Colegio.”

Two days later he called me to say, “we’re in.” The “Colegio” gave him his seat and the firm was in business. The barrier had been broken and in the following years American insurance firms flocked to the Spanish market. However, instead of being congratulated for having overcome a major barrier to American business, I was reprimanded by the embassy for having gone outside channels to do the job. It was a real “Jack Bauer” moment.

So what does this have to do with health care reform? Easy, health insurance, as with all insurance, is regulated and controlled by state law, not national law. In my letter to the “Colegio” I had stated that, “there is no US law that prevents a Spanish firm from doing insurance business there.” I had conveniently overlooked the fact that there were 50 sets of state laws that may have prevented this. And that is why I did not want my colleagues to know about my action.

The new health care bill breaks that situation. The feds will now set the rules for health care insurance instead of the states. Of course the states will probably have to enforce the new rules since the feds do not have the apparatus to do the job. This sets the stage for testing the “Constitutionality” of the new bill, i.e. state law versus federal law. And 13 state attoneys general have already begun the process to bring the new bill up for judicial review.

I have little doubt that whatever the new health care bill may be, it will be tested in the courts.