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.
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.
In one way or another I have been associated with labor management benefit funds throughout my working career. For years, the multiemployer funds were my model of how a health care system based on employment could work.
But I have become convinced that the health care system is broken at its core.
I understand that the Maryland State Senate will be considering SB 881 in committee hearings on Wednesday, March 4th. I am asking you to join the effort to lead Maryland to a single payer solution to health care in Maryland and the nation.
Who should the system serve?
First, I ask you to pay attention to who is complaining the loudest that the current system is broken. It is patients and doctors. If all of the other stakeholders aren’t facilitating patient access to care and physician delivery of care, then their role in the process needs to be reexamined. A single payer approach begins a fundamental realignment of those roles. It does not need to eliminate their roles. It needs to make them secondary.
Why is there not more support for an expanded employer role in providing health insurance to all Americans? I sense a certain exhaustion among decision makers and employee benefit professionals as they grapple with costs that just defy control. I notice at professional conferences an increasing openness to the single payer model.
We have seen one cost control fad after another. More and more employers are dropping health benefits in order to stay afloat. In this game of Old Maid, those employers who do provide benefits struggle to maintain their social compact with their employees without footing the bill for the rest of the world.
The rest of the world? How does that occur? In a number of ways.
I support a simpler health care system. That is my number one priority. Thus I am unimpressed with the health care reform platform of our newly elected president. I do share the hope and optimism of many that meaningful change can and will happen.
But getting a simpler health care system means that some of the stakeholders need to be cut lose from the system. That is a politically daunting task. It is why most health care reform proposals try to add more patches to what is already a shabby patchwork quilt of private and public programs.
One effort does try to simplify a small part of our current system. At least 30 states have mandated that insured health care plans cover all children until they reach a certain age. Yet as simple as this concept is, it comes with more variations than states that have adopted it.
What are we trying to simplify?
Most health plans offer parents with dependent children in college the opportunity to continue coverage for their child if they provide evidence that the child is enrolled in a qualified post secondary education program.
This is a holdover from the days when children entered the job market after high school and those jobs provided health insurance. Today, it is more likely that neither half of that statement is true. It is an obvious adaption to changing times. It is a relatively easy way to expand coverage to a vulnerable population. Young adults are healthier than the general population and therefore not an expensive expansion. Of course, that doesn’t prevent this trend’s detractors from referring to it as the “slacker mandate”.
