Many states are actively
considering health care reform; however, most proposals
still face barriers. Reallocation of health care costs
due to reform provides an incentive for employers who
face higher costs to move out of the state. Individual
states may not have a sufficient tax base to implement
and sustain reform measures.
State attempts to regulate
employers who self-insure raise significant issues
related to the Employee Retirement Income Security Act of
1974 (ERISA). To be effective, most state proposals would
require Congress to waive ERISA preemption. Congressional
consideration of waiver requests could result in
revisiting the issue of ERISA preemption.
A federal district court ruled May
27, 1992 that ERISA preempts a New Jersey hospital
rate-setting law that would require self-insured health
plans to pay surcharges to cover the costs of care
provided to the poor. The ruling could have a dramatic
impact on numerous state reform efforts.
In 1991, there were 992 state
mandates requiring that certain benefits be included in
health insurance plans. These mandates have been
criticized as making insurance unaffordable for small
employers. Consequently, many states have passed basic
benefits laws or bare bones laws that exempt enrollees
from most mandates.
Insurance reforms are attractive to
states because they are consistent with the states'
traditional role as regulator of insurance and rely on
the private sector to expand coverage, thus appearing not
to place large burdens on state budgets. Their
effectiveness in expanding coverage is problematic,
however, and their ultimate impact on state budgets is
unclear.
In the absence of national reform,
individual states will continue to affect their local
health care delivery system through regulation of health
insurance and health providers. Employers and other
purchasers of health care services who are active in more
than one state are likely to find increasing diversity
across local health care service markets.
