Pay, Play and ERISA

How ERISA May Trip Up Bids to Extend Coverage | WSJ | 7.7.07

States across the country, trying to extend health coverage to the uninsured, increasingly are looking to employers to help pay the bill. But their plans could be derailed by a three-decade-old federal law.

Big states including California, Pennsylvania and Illinois are debating proposals that give employers a choice between providing insurance or paying into a fund to subsidize coverage for those who can’t afford it. Several other states are considering the approach. But business opponents and others say the strategy, known as “pay or play,” might violate a 1974 law that bars states from regulating certain health plans.

The Employee Retirement Income Security Act, or ERISA, prohibits states from imposing state rules on the health plans of multistate employers that assume the risk of their workers’ health costs. Such self-insured plans can avoid a patchwork of state regulations and offer uniform benefits, helping to keep down costs. About 70 million Americans, or half of all workers with employer-provided insurance, are covered by such plans.

Interesting table in the article: