American policymakers and health policy analysts have a love-hate relationship with job-based health insurance. The policy press routinely runs articles about the demise of the current system of voluntary employer-sponsored health insurance coverage. Conservatives argue that it ought to be replaced with individually purchased insurance, such as tax-favored spending accounts. Liberals assert that government insurance ought to supplant it. Meanwhile, as the debate rages on about the future of employer coverage, states and the federal government pass legislation buttressing and building (...) on the existing employment-based system. Congress, in its recent Medicare reform legislation, not only extended publicly-financed prescription drug benefits to elderly Americans but also offered employers tax incentives to keep providing the prescription drug benefits they offer to their retirees. There is nothing new about this debate, nor the conflict in views it represents. Since its origins in the 1930s, employment-based coverage has been viewed with skepticism. Nonetheless, nearly three-quarters of a century later, the vast majority of Americans under 65 who have health insurance, and about 38 percent of those 65 and older who continue to hold private health insurance coverage supplemental to Medicare, obtain it through their current jobs (or in the case of retired workers, former jobs). The model of privately-sponsored and voluntary employment-based coverage is hardly anyone’s ideal of health system design, but it is a nearly unanimous second choice. (shrink)

American policymakers and health policy analysts have a love-hate relationship with job-based health insurance. The policy press routinely runs articles about the demise of the current system of voluntary employer-sponsored health insurance coverage. Conservatives argue that it ought to be replaced with individually-purchased insurance, such as tax-favored spending accounts. Liberals assert that government insurance ought to supplant it.Meanwhile, as the debate rages on about the future of employer coverage, states and the federal government pass legislation buttressing and building on the (...) existing employment-based system. Most recently, California has passed an employer mandate requiring employers to cover their workers and Maine has adopted a universal coverage initiative that includes a voluntary small employer insurance program offered through a state agency. (shrink)

The Employee Retirement Income Security Act of 1974 , a federal law regulating private employer-sponsored employee benefit plans, was primarily designed for pension plans, but has had a profound impact on state health care reform efforts. ERISA's broad preemption language has been judicially interpreted to preclude states from most forms of regulation of employer health plans, including benefit design and incorporating employer expenditure requirements in state health reform financing. But since 1974, Congress has never seriously returned to reexamine several fundamental (...) questions: Should employers be required to offer or contribute to employee health coverage? Should ERISA preempt state efforts to take such actions? Or should ERISA incorporate more comprehensive regulation of health plans in these areas? Although the politics of ERISA preemption have thus far blocked federal reform, while allowing state reform activity to be simultaneously curtailed, new health reform efforts may force Congress to address these questions. (shrink)

For most of the first two decades after the enactment of the Employee Retirement Income Security Act of 1974, health policymakers did not seem to recognize the full impact that ERISA would have on regulation of health insurance and health care coverage. Perhaps the early court decisions in which the courts clarified that states could regulate insurance companies and the products they sold to ERISA plan sponsors gave them false comfort that because Congress appeared to recognize the role of the (...) states in regulating insurance, ERISA might have only a tangential impact on health care reform efforts. (shrink)