Massachusetts’ rejection of higher premium rates for health insurance reflects the next step in the never-ending battle for a fairer health care system: a battle which will be largely localized.

With the encouragement of Gov. Deval L. Patrick, Massachusetts insurance regulators took the extraordinary step Thursday of rejecting nearly 9 out of 10 rate increases requested by the state’s health insurers [...]

Small businesses cheered the state’s intervention, but health insurers predicted disruption in the marketplace, including voided contracts and legal challenges. They said Mr. Patrick’s main target seemed to be his leading Republican challenger, Charles D. Baker Jr., the former chief executive of Harvard Pilgrim Health Care.

Mr. Patrick’s move, which Mr. Baker dismissed as “an election-year gimmick,” reflects the political advantage that many candidates perceive in attacking health insurance rates this year. Some analysts considered it a turning point in the health care debate in Washington when the Obama administration highlighted double-digit increases announced by Anthem Blue Cross of California.

“Right now, premium increases have never been more political,” said Sandy Praeger, the insurance commissioner in Kansas and past president of the National Association of Insurance Commissioners. “If there is any way to justify not granting the increase, commissioners are looking for them.”

This obviously cuts both ways. You can bet the health care industry will be providing money and support to those lawmakers who decide not to block rate hikes or make other decisions favorable to their interests. That’s why the industry has invested heavily in state elections, to influence the outcomes.

Six of the 15 attorneys general who have challenged the new law count health care interests among the top five industries giving to their most recent campaigns, according to the non-partisan National Institute on Money in State Politics.

Other examples:

• In 2009, health care companies made up four of the top 10 givers to the Democratic Governors Association and three in the top 10 to the Republican Governors Association. Health interests donated more than $4.2 million to the DGA and $3.9 million to the RGA, which are working to elect 37 governors this fall, a USA TODAY analysis shows.

•Health care companies and their workers spent $116.7 million on state races in 2008, almost as much as the $167.2 million that went to federal races from health care interests.

•The American Legislative Exchange Council, a group of state lawmakers pushing model bills “to stop ObamaCare at the state line,” counts health care executives among its top members.

Not every state has the regulatory discretion on Massachusetts to reject rate hikes; about 21 have no ability to influence rates at all. But all of them will be building state exchanges for the individual and small-group markets. This makes the states crucial to the implementation, regulation and enforcement of health care reform. Suzy Khimm writes that the different dynamics in state governments will have a distorting effect on how the reforms play out at the local level. In other words, Congress didn’t pass one health care law, but fifty. And now, fifty separate fights will produce fifty separate versions of the law. We know insurers and providers will stand ready to influence that decision; will health and consumer advocates have the resources and will to fight?

Finally, Massachusetts’ rejection of the rate hikes is a tool that the federal government does not have in their toolkit. They failed to pass the Health Insurance Rate Authority in the reconciliation package, and nobody has suggested they take it up with standalone legislation. The easiest way to take the politicization of that issue out of the state’s hands is by setting up a federal regulatory authority. It also happens to be the right thing to do.