Building Upon Health Care Successes
The Importance of Protecting ERISA
The passage of the Employee Retirement Income Security Act (ERISA) in 1974 paved the way for employers to efficiently administer health insurance plans for their employees. Today, employer-sponsored health insurance programs are the primary means by which Americans gain access to health care. Thanks to ERISA, 170 million Americans participate in health care programs available to them through an employer.
What makes ERISA successful?
ERISA streamlines the administration of health care benefits by eliminating the conflicts, ambiguities and peculiarities that arise when states and localities institute disparate regulations. ERISA provides health plan administrators with a uniform set of rules to establish employee health plans. Simply put, a patchwork of state and local mandates that requires individual industries to play by different rules will hinder, not help, the expansion of health care coverage in America.
Challenges to ERISA Preemption
The Supreme Court has held that ERISA preempts “any and all State laws insofar as they may now or hereafter relate to any employee benefit plan.” Despite the clarity of the statute and the success of the law, however, several states have challenged ERISA preemption with limited success.
Maryland:
In 2006, Maryland adopted legislation that would have required for-profit employers with 10,000 or more employees in the state to either spend at least 8 percent of their total payroll costs on employee health insurance costs or pay to the state the amount equal to the difference. In response, the Retail Industry Leaders Association challenged the measure on the grounds that it was preempted by ERISA. In January 2007, the Fourth U.S. Circuit Court of Appeals upheld a lower court ruling which found that the Maryland law was preempted by ERISA. In the ruling, the court restated the importance of ERISA preemption : “[ERISA's] preemption provision aims to minimize the administrative and financial burden of complying with conflicting directives among States or between States and the Federal Government and to reduce the tailoring of plans and employer conduct to the peculiarities of the law of each jurisdiction.” (Retail Indus. Leaders Ass' v. Fielder, 475 F.3d 180, 191 (4th Cir. 2007))
Suffolk County:
Under a law passed in Suffolk County, N.Y. in 2006, employers with health care expenditures below a specified level were required to pay the difference. RILA filed suit, arguing that the law was preempted by ERISA. Quoting the decision in RILA v. Fielder, the court agreed that the Suffolk County law was preempted by ERISA, and thus struck it down.
San Francisco:
In September 2008, the Ninth Circuit Court of Appeals ruled in favor of the City of San Francisco in a suit brought by the Golden Gate Restaurant Association (GGRA), which was filed in response to an employer health care mandate imposed on San Francisco businesses. The mandate required employers with more than 20 workers to spend a minimum amount on health insurance and set money aside in health reimbursement accounts or pay a fee to the city's health program. The case is now likely headed to the U.S. Supreme Court, where justices will be asked to weigh in as a matter of national importance based upon the conflict with previous rulings in the Fourth Circuit.
Build upon the Strengths of ERISA
Successful health care reform should build upon the strengths of America’s successful voluntary employer-based system by making it easier for employers to provide quality health care for their workers and their families. Protecting ERISA ensures the availability of a greater variety of affordable private health care options and incentivizes innovation. Wellness programs, in-store and on-site clinics, Health IT, and low cost medications are a product of innovative retailers empowered to deliver affordable health care.
Protecting ERISA and incentivizing innovation will strengthen not only America’s health security but also our economic security.