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Volume 12 Number 100 News: Access Change at the state level is the most promising hope for health care reform, a speaker said May 23 at the International Foundation of Employee Benefit Plans' Washington Legislative Update in Washington. Alan R. Weil, executive director for the Washington-based National Academy for State Health Policy, said there is great interest from states in legislating universal health care coverage but that not much has happened. Only three states have enacted legislation mandating universal coverage: Maine in 2003, Massachusetts and Vermont in 2006. Weil said the consensus across the states enacting and considering such legislation is that health care reform should:
States are not questioning an employer-based platform, but instead are charging employers who do not cover employees, Weil said. For example, Massachusetts employers must pay $295 per year for each employee not covered, while Vermont imposes a $365 annual assessment. However, this is much less than the cost of providing coverage, Weil said. In addition states are looking to employers to handle the administrative side of health care, Weil said. However, Weil said multistate plans could have a problem with state health care reform in that different states will have different rules and expectations. For example, states may have different individual mandates requiring different coverage. An individual mandate requires every person age 18 and older, to obtain and maintain "creditable" health insurance coverage so long as it is deemed "affordable" by the state. People who do not have such coverage would have to pay a penalty. Although the plans are not required to offer certain coverage, they will have to conform to what individuals are required to have in each state. No More Wal-Mart Bills Weil said the decision of the U.S. Court of Appeals for the Fourth Circuit in Retail Industry Leaders Association v. Fielder, which held that the Employee Retirement Income Security Act preempted Maryland's "Wal-Mart Bill," (No. 11 HCDR 1/18/07) took the wind out of the sails of similar laws. The bill, the Fair Share Health Care Fund Act, would have required for-profit employers with 10,000 or more Maryland employees to spend at least 8 percent of their total payroll on employees' health insurance costs or pay the amount their spending falls short to the state of Maryland. According to the court, only Wal-Mart, which employs approximately 16,000 in Maryland, would have been subject to enforcement under the law's minimum spending requirements. "Because the Fair Share Act effectively mandates that employers structure their employee healthcare plans to provide a certain level of benefits, the Act has an obvious 'connection with' employee benefit plans and so is preempted by ERISA," the majority wrote. Problems With ERISA ERISA preempts state laws that "relate to" ERISA plans. Weil said there were four options for how states can address the ERISA issue. The first option is to do nothing, Weil said. ERISA's broad preemption of state action means states cannot touch ERISA plans. The second option is to create safe harbors within ERISA for state action. A problem with that is there is no guidance from the Labor Department and little guidance from the courts regarding state health reform, Weil said. Therefore, states do not know what they can do. For example, pay-or-play statutes, which require employers to pay a certain percentage of their payroll costs for health care coverage or contribute a like amount into a state fund for the uninsured, have never been tested in the courts, Weil said. Even if they are, there is a five-year lag between enactment of a law and a court decision, he said, adding that such a delay makes states reluctant to go forward. A third option is a structural waiver process affecting ERISA, Medicaid, and Medicare, which would give limited circumstances where states have control. The fourth option is amending ERISA, Weil said. More information is available.
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