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Will Congress Wrap Group Health in a 50-State Crazy Quilt?

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Members of Congress should think hard before trying to resolve conflicts over the Affordable Care Act by letting each state set its own group health rules.

Vanessa Scott, a benefits lawyer, makes that case in a new commentary on the idea that policymakers should be working to strengthen health benefits law uniformity, not weaken it.

(Related: Supreme Court Blocks Missouri FEHBA Preemption)

Drafters of one of the major pieces of legislation that now shape the U.S. benefits market, the Employee Retirement Income Security Act of 1974, or ERISA, tried to hold down employer health and retirement plan costs by exempting self-funded, multi-state plans from state benefits rules.

“Health care reform is clearly needed, but it should not disrupt the uniform administration of ERISA on a nationwide basis through mandates or other requirements, nor should it prioritize flexibility over preemption,” Scott writes in the paper, which was distributed by the American Health Policy Institute.

ERISA uniformity plays a vital role in helping employers to offer uniform benefits to employees on their dependents at a relatively low cost, Scott writes.

American Health Policy Institute

Tevi Troy, the executive director of the Washington-based institute, and Mark Wilson, the chief economist, held high-level insurance and benefits regulation posts in the administration of former President George W. Bush.

USA (Image: Thinkstock)

(Image: Thinkstock)

The chairman of the group is Marc Reed, chairman of Verizon Communications Inc.

Scott, the institute’s legal advisor, is a partner at Eversheds Sutherland Ltd. In the past, she worked as a legislative counsel at the ERISA Industry Committee.

The Analysis

Scott writes in the new paper that the drafters of the Affordable Care Act, and many state-level implementers of the law, appear to be indifferent toward the idea of maintaining benefits law uniformity.

Some states have been fighting for the ability to impose some requirements on self-insured group health plans in recent years, such as requirements to make self-insured plans contribute health plan claim data to all-payer claim databases.

Recently, drafters of some of the major Republican efforts to change the Affordable Care Act have proposed letting each state decide whether to keep Affordable Care Act major medical insurance underwriting rules and benefits package requirements.

In the new commentary, Scott distinguishes between efforts to let a state discard Affordable Care Act rules and efforts to let a state create new requirements for employer-sponsored health plans. 

“While health care reforms should offer states greater flexibility to free their individual and small group health insurance markets from costly ACA regulations, those reforms should not place new mandates or burdens on health plans governed under ERISA,” Scott writes. “Congress should not adopt or amplify the ACA’s indifferent approach to ERISA preemption in the interest of state flexibility and innovation. While states should still have broad authority to regulate health care providers and health care insurers, ACA reforms must clearly and explicitly prohibit approaches that permit state regulation of ERISA plan benefits, force plans to provide sensitive claims data, or impose new state-mandated taxes and fees.”

—-Read Supreme Court backs self-insured plans in ERISA case on ThinkAdvisor.


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