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July Finance Technical Advisory Committee meeting: The barrier that is ERISA

By Consuelo Echeverria 

The July meeting of the Financial Technical Advisory Committee (FTAC) was the second of three deep dives into the Employee Retirement Income Security Act (ERISA) of 1974. While there is much to digest in Harvard’s Center for Health Law and Policy Innovation presentation, no solutions were presented. The overall take-away is that ERISA is a barrier to state-based universal health movements. This includes challenges to fair share payments of health costs by employers and state-based all-payer claims databases. 

However, there is a solution!

Georgia state health policy researchers Erin C. Fuse Brown and Elizabeth Y. McCuskey have a strategy to hopefully overcome ERISA challenges. They’ve outlined that strategy and the relevant case law in their paper, Federalism, ERISA, and State Single-Payer Health Care. Our own Cris Currie’s paper, ERISA and State Single-Payer Healthcare: A Primer, suggests how this strategy can be applied in Washington state. 

Make your voice heard! 

The next meeting of the FTAC is Thursday, September 14, 2023, 2-4 p.m.

First, what is ERISA? 

Employer-sponsored benefits are largely governed by federal law through ERISA that establish rules that employee benefit plans must cover

Most notably, the ERISA "preemption clause" states that the federal law supersedes state laws relating to employee benefit plans. While ERISA was not designed as a health care law, the preemption has been used to challenge many state-based universal health care attempts. 

Brown & McCuskey, 2019 found that 66 unique single-payer bills were introduced across 21 states from 2010 to 2019, many of which have been stymied by ERISA. 

For more, see their commentary on their paper in Could States Do Single-Payer Health Care?  

Relevant case law

One key ruling that negatively impacts state health care monitoring is Gobeille v. Liberty Mutual Insurance Company. This ruling provides a precedent for preventing states from requiring private insurers to submit their data to all-payer claims databases.

All-payer claims databases are large state databases that include medical, pharmacy, and dental claims and eligibility and provider files from private and public payers. The data is used to monitor and improve health care access, affordability, and cost transparency. 

In 2016, Vermont required Blue Cross/Blue Shield (Blue Cross), a third-party administrator for Liberty Mutual Insurance Company, to share their claims data with Vermont’s all-payer claims database. Liberty Mutual declined and filed suit, stating that disclosing confidential information violated its fiduciary duties.

The case wound its way up to the Supreme Court, which found that ERISA preempted Vermont’s law. As a result, Vermont had to exclude the Blue Cross claims data from their all-payer claims database. This decision limited the database's usefulness in helping the state monitor the cost and delivery of health care.  

In her dissent, Supreme Court Justice Ruth Bader Ginsburg highlighted the fact that Vermont’s data collection law and ERISA serve different purposes. ERISA’s domain is employee benefit plans with reporting requirements that ensure plans do in fact provide covered benefits. In contrast, Vermont’s “data-collection aims to maintain and improve the quality, and hold down the cost, of health care services.” She ends that the efficacy of these databases depends on comprehensive reporting, which is impossible without private payers’ claims data. 

How this ruling impacts Washington state

Washington state also has an all-payer claims database. This ruling stops our state from requiring private insurers, such as Aetna and Blue Cross/Blue Shield, to submit their data. So instead, our state has nicely asked these huge companies, which insure 55 percent of Washingtonians, to voluntarily submit their claims data for the state’s all-payer claims database. Not surprisingly, many of these companies are unwilling to do that. Just like Liberty Mutual in Vermont, these companies cite liability concerns.

As with Vermont, the lack of self-insured employer claims data hugely undermines the aim of our state’s all-payer claims database to monitor and improve health care affordability and cost transparency. 

Other rulings that might impact our state’s fight for universal health care

The presentation brought up three other contradictory ERISA rulings. They are contradictory in the sentence that they resulted in different rulings on whether the case represented a preemption of ERISA. 

The lack of clarity in these rulings might impact our fight for universal health care in Washington state, and needs to be considered as we build coalitions with our neighbors in Oregon and California.

Action: There is hope! 

As mentioned before, health policy researchers Brown & Mccuskey have outlined a strategy to overcome ERISA’s challenges. This strategy is outlined below.

  • Type A–Funding Plan: A payroll tax as percentage of wages paid and not based on the employer’s benefits expenditures. This would be technically beyond the reach of ERISA.
  • Type B–Provider Restriction: Use provider regulations to draw individuals away from employer-based plans. Since provider regulation is beyond the scope of ERISA, its state preemption should not apply.
  • Type C–Assignment/Subrogation/Secondary Payer. This plan includes clauses to pay for services and seek reimbursement from other payers during the transition to a full single-payer system when other payers, such as self-insured employers, might still be operating.

The ABC strategy’s relevance for Washington state is outlined in Cris Currie’s paper, ERISA and State Single-Payer Healthcare: A Primer

Make your voice heard! 

Please make a public comment to urge FTAC and the HMA consultants to not waste precious time and instead design a plan that implements Brown & McCuskey’s ABC strategies. 

The next meeting of the FTAC is Thursday, September 14, 2023, 2-4 p.m.

Catch up on past UHCC and FTAC meetings

Listen to the recording or read the slıdes at the FTAC Past meetings page. 

To get our take, you can read past meeting recaps on our website.

These meetings continue to welcome public comments. 

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