CLICK HERE for Larger ImageLast week’s post highlighted encouraging initiatives in several states to implement a single payer system within a single state.
This was always a daunting challenge even before health reform. The Patient Protection and Affordable Care Act has raised the bar even higher.
ERISA and its preemption
Before PPACA a legal hurdle called the ERISA preemption severely hamstrung state health reform efforts. For those of us in the employee benefits profession, ERISA, including its preemption clause, is our bible or at least our Deuteronomy.
ERISA was passed by Congress in 1974 to regulate employee benefit plans. The preemption clause precludes states from regulating employee benefit plans. There were two exceptions to that preemption and both are instructive.
Insurance and not insurance
Under the McCarran Ferguson Act of 1945 states have the authority to regulate insurance plans. Under ERISA states still retain the right to regulate insured health plans.
After the law was passed, Congress figured out that the state of Hawaii had already established a law requiring employers to provide health insurance to their employees. I guess news travels slowly from Hawaii. Congress passed the first of many subsequent amendments to ERISA making an exception to the general preemption for Hawaii.
One reason for the preemption clause was the belief that Congress would tackle national health care reform soon and they wanted to protect that right at the national level, a theme that would reappear in PPACA.
The consequence of allowing states to only regulate “insured” health plans was the movement by many larger employers to “self-insured” plans. By taking on the risk of health insurance themselves, employers escaped the mandates imposed by state insurance departments. Companies operated in multiple states could establish uniform benefit designs for all of their employees. At least one source estimates about 43% or 53 million people with health care coverage are regulated by ERISA and not by state insurance departments.
Hawaii
When Congress exempted Hawaii from the preemption clause they only exempted the Hawaii law as it existed in 1974. Employers have since discovered the loopholes in Hawaii law for part time employees and contract employees. Now, even though Hawaii has always had the lowest rate of uninsured in the country, that number is increasing as more and more employers exploit that loophole.
The ERISA preemption prevents efforts by state to expand coverage by requiring employers to offer health insurance. Instead they are confined to a hodgepodge of confusing and complicated programs to expand state Medicaid insurance programs or offer subsidies to small employers.
Obama blocks states?
The PPACA does not make it easier for state single payer advocates. The Obama Administration vigorously opposed bipartisan efforts in the House Education and Labor Committee to give states more latitude as laboratories for reform.
In the first corner: “We have the best health care system in the world. People travel to this country from all over the world to get the best health care. the parking lots in hospitals bordering Canada are full of cars with Canadian license plates.”
In the second corner: “There are 100,000 deaths per year from hospital infections and a similar number from prescription drug errors, and an equally horrific number of people who need to be re-admitted to the hospital for complications. And what about “Never Events”, those medical errors that are described as adverse events that are unambiguous (clearly identifiable and measurable), serious (resulting in death or significant disability), and usually preventable.
And there is a voice in a third corner: “We have the most expensive health care system in the world yet the United States is not ranked among the top twenty nations in infant mortality, maternal mortality, longevity, or hospital admissions avoidable with access to health care.”
It’s a bit like arguing who won the Super Bowl (this is Super Bowl weekend, after all) by comparing rushing yardage, passing yardage, first downs, time of possession. Unlike football, in health care there is no touchdown metric, no definitive “points on the board” that decides health care quality.
When a 2,000 page piece of legislation traverses the legislative sausage making process, it is a large target for those who want to take pot shots.
When you are trying to fix a system that is broken in lots of places, it is not an easy process.
Let’s remember what we are trying to fix.
The system does not cover everybody. Estimates on the number of uninsured range from 30 million to 70 million depending on whom and how you are counting.
It’s expensive. Our economy already sets aside more resources per person than any other country on the planet. We pay more in taxes for health care than any other country on the planet.
We are not a healthy country. Relative to other industrial countries, we don’t live long. Our babies die before they reach their first birthday. Our pregnant mothers die in child birth.
That’s a lot of fixes.
In fact, the 2,000 pages is a pretty mediocre start. If either the House or the Senate version survives intact, it still will not cover everybody. It still will be expensive. And there isn’t much reason to believe that we will be any healthier as a result.
But it is a start.
And let’s not forget that simple in the form of single payer (HR 676) was taken off the table very early in the process.
