No doubt some of my more erudite lawyer friends know why Congress has the power under the Commerce Clause to regulate interstate commerce. Query: Should it have the power to regulate an industry that is restricted to selling intrastate, and out of state residents are not permitted to purchase coverage? I'm not saying that Congress can not create a national insurance industry, but can it prohibit states from regulating intrastate sales of insurance. Can congress dictate terms and conditions of insurance policies that are sold only intrastate to instate residents?

        For those who are not lawyers perhaps a portion of an article that I wrote will put you to sleep, or perhaps be of interest to know how the commerce clause has been interpreted by the Supreme Court:

        Article 1 Section 8 of the U.S. Constitution as it pertains to interstate commerce simply reads that Congress shall have the power: “To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes;”

        There is an interesting 1942 case called Wickard v Filburn. As part of FDR’s new deal The Agricultural Adjustment Act of 1938 limited the area that farmers could devote to wheat production. Filburn produced more than the permitted wheat, but the excess wheat was used by Mrs. Filburn to bake bread for her family and never entered commerce at all. The Federal Government intruded through the application of the Commerce Clause. The U.S. Supreme Court in Filburn decided that while the extra wheat never actually entered into interstate commerce, its private use multiplied many times would have a “substantial economic effect” upon interstate commerce; therefore, Congress had the power to regulate it. The Court’s opinion read:

though it may not be regarded as commerce, it may still, whatever its nature, be reached by Congress if it exerts a substantial economic effect on interstate commerce and this irrespective of whether such effect is what might at some earlier time have been defined as 'direct' or 'indirect.

If the states had distinct interests, were unconnected with each other, their own governments would then be the proper and could be the only depositaries of such a power; but as they are parts of a whole with a common interest in trade, as in other things, there ought to be a common direction in that as in all other matters. Alexander Hamilton, Continentalist, no. 5

        Hamilton was reflecting upon the Articles of Confederation by denoting how a central government might regulate foreign commerce such that it would not tend to benefit one State over another. He did not discuss whether the Congress should have the power to control commerce within a State since such a thought would have been unthinkable. The entire discussion at the time the Commerce Clause was written centered around import and export duties on goods between the States and with foreign Countries.

        A very material object of this power was the relief of the States which import and export through other States, from the improper contributions levied on them by the latter. James Madison, Federalist, no. 42, 283—85 The Commerce Clause was to assure that no State would impose self-serving duties upon imports from other States of the Union.

Were these (States) at liberty to regulate the trade between State and State, it must be foreseen that ways would be found out, to load the articles of import and export, during the passage through their jurisdiction, with duties which would fall on the makers of the latter, and the consumers of the former. Id.

        A significant change in philosophy was articulated by none other then the father of the power of the Supreme Court to declare acts of Congress unconstitutional. In the matter of Gibbons v. Ogden 9 Wheat. 1 1824  the Court extended the control of Congress beyond duties, tariffs and commodities to regulating the navigable waters of NY harbor and governing the transportation of passengers in navigable waters. Still Chief Justice Marshall in that case retained the definition of “commerce” as limited to monetary transactions. Since then the Commerce Clause has been applied to any “intercourse”, travel, movement of goods and services that cross State lines. There is now virtually nothing that Congress cannot control via the power granted to it by nine Justices of the Supreme Court.