in quality or will more individuals end up uninsured because of increased
costs? It is clear that additional mandates and regulations
on health plans will increase costs, but it is not known by how
20 Therefore, it is impossible to predict the extent to which
employers and unions would stop providing benefits if faced with
The central question is this: Can the present marketplace force
a higher quality of health care, or will regulation better serve consumers?
And if regulation is chosen, will many potentially innovative
ways to finance health care be lost, as employers assert, because
strict regulations limit experimentation?
The term group health plan is used in ERISA to describe “an employee
welfare benefit plan providing medical care (as defined in
section 213[d] of Title 26) to participants or beneficiaries directly
or through insurance, reimbursement, or otherwise.”
For example, in the early 1960s, when the Studebaker automobile
company collapsed, thousands of vested workers too young to retire
were left with substantially reduced pension benefits.
Recent court rulings appear to have placed a limit on the states'
ability to regulate completely the design of an insured plan. For instance,
some states' any willing provider laws have been ruled to be
preempted by ERISA. For example, in Texas Pharmacy Association v.
Prudential Insurance Company, the Fifth Circuit Court of Appeals
ruled that any willing provider law was preempted by ERISA.
States are able to regulate the solvency and other basic insurance
aspects of stop-loss insurers but cannot mandate health benefits for
stop-loss insurance plans.
An attachment point is the maximum amount a self-funded plan
must pay on a total cost or per employee per benefit year basis before
the stop-loss insurer assumes liability.
For example, see Brown v. Granatelli (1990).
Shaw v. Delta Air Lines (1983).
Debuono v. NYSA-ILA Medical Services Fund (1997), California Division
of Labor Standards Enforcement v. Dillingham Construction, N.A., Inc.
(1997), and Boggs v. Boggs (1997).
The test contained the following three parts: the activity must spread
risk, the relationship between insured and insurer must be an integral
Questia, a part of Gale, Cengage Learning. www.questia.com
Book title: Regulating Managed Care: Theory, Practice, and Future Options.
Contributors: Stuart H. Altman - Editor, Uwe E. Reinhardt - Editor, David Shactman - Editor.
Place of publication: San Francisco.
Publication year: 1999.
Page number: 200.
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