ERISA Preemption: The Wrench In State Universal Coverage Initiatives?
This weblog entry from Chris Reed on the San Diego Union Tribune website presents a thorny and important question about state initiatives to provide universal healthcare coverage: to what extent will these laws be preempted by ERISA?
ERISA preemption is an issue that raises its ugly head as to all state laws that "relate to" ERISA governed employee sponsored health benefit plans. That's no small bit of the healthcare financing field. The great majority of medical coverage provided by employers is governed by ERISA. And what is a state law the "relates to" such a plan? Sorting that out is the type of question on which lawyers and judges have and will continue to spend inordinate time . If a state law "relates to" an ERISA plan under the statute's language and is not saved from preemption as a law that regulates insurance, it is wiped off the books and has no effect, at least with regard to the ERISA plan. If courts rule that a particular state universal coverage initiative is preempted by ERISA, that initiative will effectively be eviscerated.
The ins and outs of ERISA preemption analysis involve dealing with ERISA's savings clause, deemer clause, complete preemption analysis, conflict preemption analysis, the entire "relates to" analysis, and more. It is far too long and complex to cover in this or any other blog entry.
I don't share the blogger's opinion that the proposed California state health insurance initiative is self-evidently preempted. I don't know much about the proposal but I do know that ERISA preemption analysis is simply too complex to justify such a definitive conclusion. But I do agree that this is a critical issue. Individuals putting together these initiatives should think hard about, and try to structure their laws in ways to avoid, ERISA preemption.