As he takes his ambitious health-care overhaul plan to the
country, President Bill Clinton envisions a big, and possibly
central, role for the states.
He wants his old friends in the state capitals to spearhead and
manage the most complicated elements of the reform package. And he
desperately needs them to help sell the idea to a still-skeptical
public. But governors and state legislators have reason to be
skeptical. About all they can see in Clinton's grand design is the
extra burden it will place on states to (1) make sure every citizen
has access to health care, (2) make sure every business pays a
large share of its employees' health-care costs, and (3) make sure
health-care providers are keeping costs down.
What will states get in return? Not much, at least in the short
run. To them, the most important thing Clinton can offer is a
maddeningly unstated promise: States presumably will be set free to
proceed with their own separate schemes for health-care reform,
especially those that seek to expand insurance coverage for the
Several already have such plans in the works. What they want
most from their old pal Clinton is to be allowed to escape from
some existing federal strangleholds.
Right now, the obstacle in the path of state health-care
initiatives is a federal law by the name of ERISA: the Employee
Retirement Income Security Act of 1974. This statute governs not
only pensions but all employee welfare-benefit plans.
Under ERISA, states can regulate insurance companies, which
means they can control premium rates and can mandate benefits in
employee plans purchased from an insurer. But they cannot regulate
employee health benefits provided and managed by large companies
that can afford to write insurance policies for themselves.
Nor can they impose any taxes on those plans to help cover the
uninsured. ERISA also pre-empts states from requiring employers to
provide health insurance or to offer specific health benefits.
About 60 percent of all employees work for employers with
self-insurance benefit plans. So states that want to provide
coverage for all residents can make little headway absent any
control over these employers. Only Hawaii, which passed a universal
coverage law based on employer mandates in 1974, has been exempt
So why doesn't Congress just change the law to give states more
flexibility under ERISA? It tried this past summer as part of
Clinton's deficit-reduction package. …