This paper examines judicial interpretations of the Employee Retirement Income Security Act (ERISA) and discusses the opportunities to enact health care reform initiatives in light of those interpretations.
ERISA is a federal law regulating the administration of private employer-sponsored benefits including health benefits (i.e., health insurance offered by an employer). Because the federal government generally has exercised its authority to pre-empt state regulation of the administration of private employer-sponsored health plans, states are blocked from enforcing laws interfering with ERISA.
As many states pursue health care reform experiments, ERISA preemption becomes relevant as a potential limit on the scope and type of reforms states are able to enact. The dominant trend in ERISA litigation has been to pre-empt state legislation and litigation interfering with the administration of private employer-sponsored health plans, making large-scale state health care reform initiatives difficult.
This paper discusses:
- ERISA's preemption provisions;
- ERISA challenges to state regulation of health plans and insurers;
- ERISA's potential application in smaller-scale health care regulation;
- ERISA and state tort lawsuits; and
- Ways ERISA preemption could be changed by Congress or regulatory action.
(The paper notes that individual mandates have not yet been litigated under ERISA, but courts are unlikely to find that individual mandates bind administrators and dictate plan choices.)
The paper observes that while it is difficult to easily predict what will be pre-empted, there is consistency that emerges over time, which is the return to preemption as a default.
Given this trend, the author concludes that states must tread carefully in crafting health care reform initiatives that address the crisis of the uninsured without impermissibly burdening private employers' provision of employee benefit plans.
This white paper is part of the Legal Solutions in Health Reform project. It was created by the O'Neill Institute for National and Global Health Law at Georgetown University. The project aims to identify practical, workable solutions to the legal issues that may arise in any upcoming federal health reform debate.
Keywords: Policy reform ideas, Delivery systems, Mandates, Legal issues/reforms, Federalism, Regulation, State models for national reforms, Administrative cost/structure, Play-or-pay, Market reform ideas, Insurance exchange