More on the Health Reform/ERISA Conundrum

One of the murkiest areas in state health reform is the topic of ERISA — the 1974 Employee Retirement and Income Security Act — which has been interpreted by federal courts to prohibit state mandates on employers regarding the scope of self-insured benefits and the ability of states to mandate that employers provide health insurance coverage. The murkiest part of “ERISA pre-emption” is the state activity known as “pay or play,” requiring employers who don’t provide a minimum level of coverage to pay an assessment/tax/fee to the state.

An oft-asked question around town is: why has there been no ERISA challenge to any aspect of Chapter 58. Stephen D. Rosenberg of the MacCormack Firm thinks he knows — in his Boston ERISA and Insurance Litigation blog:

“…the Massachusetts statute is much more a mechanism – Trojan horse, some might say – to transfer the costs of the uninsured onto the tax rolls, rather than, by employer mandates, onto the business community. I think it is a safe bet that, had the act been drafted to transfer more of the health insurance costs onto the business community rather than onto the state taxpayers, you would have quickly seen a preemption challenge mounted. And finally in this regard, note the article’s reference to the amount of money that employers have paid to date for not providing the health insurance required by the statute, which is the underwhelming amount of 5 million dollars. I suspect Wal-Mart spent not too much less in legal fees to get the Maryland Fair Share Act overturned, and those aren’t numbers, spread across an entire business community, that are likely to provoke any economically rational business person to want to fund litigation over the act. Start to see those numbers creep up substantially, however, and you can safely plan for a preemption challenge.”

And Mr. Rosenberg, we presume, would be only to happy to take the case…