Jitters About State Healthcare Reform
The latest issue of Employee Benefit News contains an article titled “Fighting ERISA Erosion” which you can find here. The article’s concern is that allowing states to proceed with their own experiments in reforming how and who pays for universal healthcare coverage is a recipe for disaster because it impairs the uniformity that supposedly exists across the country right now under ERISA. Well, I sort of see the point. But I also think the worries are a bit overwrought.
It’s not as if employers in this country don’t have to deal with different state laws under ERISA. Right now many ERISA governed health benefit plans are self funded and are generally exempt from all state laws that directly affect their ERISA plans. But most employers are still subject to state laws in one form or another. Fully insured ERISA plans are subject to all state laws regulating insurance. In addition, all state and local government employers such as school teachers, police, firefighters, together with individuals covered by church sponsored plans can't claim any ERISA preemption of state laws whatsoever. And, as I’ve said before, I don’t have too much question that state plans which don’t directly require employers to provide coverage (such as the Massachusetts program which places responsibility to obtain coverage on individuals rather than on schemes such as Maryland’s which targeted employers) will escape being struck down as preempted by ERISA.
But perhaps the most enlightening fact in the article is that no employer or other entity has yet filed suit to challenge the Massachusetts statute. Why would this be? There are a number of possibilities. Perhaps the judgment of employers or plan administrators is that the statute is not likely to be preempted by ERISA and the lack of a challenge on that basis represents a strategic decision by those entities not to fight what they believe is likely to end up as a losing battle. Or perhaps employers and plan administrators believe the advantages of having the scheme take effect outweigh the disadvantages.
Maybe a scad of cases challenging the statute is about to be filed but I doubt it. The absence of a challenge to the Massachusetts program based on ERISA preemption so many months after its unveiling suggests that either ERISA preemption is far from sure or that the ox that is ERISA plans is not particularly gored by the Masschusetts program to provide universal coverage.
Since EBN is a publication geared almost exclusively to individuals who are in the business of designing, administering, and paying employee benefits, the anti-state reform slant of the article isn’t surprising. But I also think it is somewhat of a tempest in a teapot, at least so long as states don’t specifically impose coverage mandates on employers. It’s that last aspect of any state reform effort that is going to draw fire from the ERISA preemption proponents.