Erisa Is Health-Care Roadblock
Governing, David Rapp, St Louis Post-Dispatch (MO)
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 uninsured.
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 from ERISA.
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. …