There's nothing "asinine" about that, for the following two reasons:
1. The insurance industry is regulated at the state level, and as such an insurance company cannot sell a policy in a state without first being licensed to do business in that state.
2. Related to #1 ... Each state has its own set of regulations, many of which include provisions that mandate coverage for various types of medical procedures.
Item #2 is particularly important because it goes a long way toward explaining why medical insurance in some states is much more expensive than in others. Some states require insurance companies to cover all kinds of medical procedures, some of which are of questionable value (chiropractic care, experimental treatments, etc.) or even downright idiotic (sex change operations, etc.).
I say leave the states alone and let them regulate the industry as they wish. That's what the Tenth Amendment says, anyway.
While I agree with you along the states rights argument. Much of the heartburn caused by health insurance is because someone had to move for a job, or whatever, and they lost health insurance and couldn’t get it again because of existing conditions.
Do you know of any other examples siilar to this? I am interested in researching the subject.