What does the McCarran Ferguson Act allow the federal government to do?

The McCarran-Ferguson Act of 1945 established that states have the primary authority to regulate the insurance industry, emphasizing that federal regulation of insurance should not occur unless states fail to provide adequate oversight.

Choosing the option that states the federal government can assume regulation if state oversight is inadequate accurately reflects the intention of the McCarran-Ferguson Act. This provision creates a framework where, if a state is unable to effectively regulate its insurance sector, the federal government is allowed to step in and impose regulation. The Act thus balances powers between state and federal jurisdictions, ensuring that insurance is primarily regulated at the state level while providing a safety net for federal intervention when necessary.

The other choices do not accurately depict the essence of the Act. The federal government does not have the authority to regulate insurance without state consent or completely replace state regulations, and the legislation does not focus solely on health insurance but encompasses various types of insurance regulation.