By Evan Falchuk

So, last week the House and Senate Judiciary Committees reported out bills that would end the antitrust exemption health insurers currently enjoy under federal law.  The President got in on the game, too, urging that the laws be passed because these companies were operating in ways that hurt consumers.

You’d think that when it came to state insurance regulators, the game was up.  But, you would be wrong.

Thursday, according to the National Underwriter, the House Financial Services Committee voted “to totally exempt insurance companies and their products” from oversight by a proposed U.S. Consumer Financial Protection Agency.  The amendment that created the exemption was jointly introduced by a Democratic and a Republican member.

In the statements by the industry groups that supported the exemption, you can see the outlines of an argument that may yet be made by states against the federal regulation embodied in the major health insurance reform proposals.

Jimi Grande, of one of the trade associations said, exempting insurers prevents “an unnecessarily duplicative and costly regulatory scheme that would ultimately hurt the very consumers the legislation is meant to protect.”

And there’s more evidence the states are making a comeback.

All the news yesterday was that the “public option,” long thought dead, was being resurrected.  Why?  Because under the newest version states could decide keep the federal insurance company out of their state insurance markets.

The storm continues to gather, and the least-talked about battle of the reform debate continues to brew.