Four problems facing meaningful state health care reform and coverage in the United States.

• Author: Akiwumi-Assani, Arlene
• Position: COMMENTS

1. INTRODUCTION

   According to the United States Census Bureau, the percentage and number of uninsured Americans has increased since 2000 to over 15.8%, or forty-seven million people. (1) Health care premiums are spinning out of control, so fewer employers are offering insurance to their employees or are passing along costs to those employees that are insured. (2) These statistics confirm the escalating health insurance crisis in America and the need for a comprehensive and feasible solution to provide affordable insurance in the midst of rising health care costs.

   Specifically in the United States, most insured people are covered through private employers, while some receive public health care insurance via government health plans, or with Medicaid or Medicare. (3) When the government does provide health insurance and benefits not tied to employment, it is generally based on income level along with other factors, and may include public assistance payments as well as health coverage. (4) Although Medicaid, a health benefit for low income individuals, covers several million Americans who would otherwise be uninsured, several inherent issues arise through astronomical spending, and covered patients may face second-class treatment by essential providers refusing to treat Medicaid patients. Many uninsured individuals are not eligible for Medicaid, however, due to the income and other eligibility requirements, but cannot afford private pay insurance premiums if not offered by their employer. (5) Although Congress attempted to change health care in America, no meaningful reform has yet passed, thus leaving reform to the states to create programs that will help those employed, without health care coverage, and who are above the poverty line. (6)

   Looming in the background, however, is the Employee Retirement Income Security Act of 1974 (hereinafter ERISA), which broadly preempts any state program "relat[ing] to any employee benefit plan." (7) Specifically, many state-level health care reforms include mandatory employer-provided insurance, or a "pay-or-play" scheme, which requires employers to contribute a specific amount of payroll towards employee health insurance or pay the difference to the state for publicly-provided health programs. (8) However, ERISA preempts almost every type of "pay-or-play" plan; if allowed, these plans would help bridge the gap for uninsured Americans. (9) Therefore, without an express mandate from Congress or an exception to allow states to regulate employee benefits only for health insurance, employers may either limit health care benefits offered to employees or choose to stop providing health benefits altogether, forcing uninsured workers to seek health insurance in another arena. Although states may provide indirect incentives for employers to provide health insurance to their employees, such as tax credits, these methods are less effective without an actual mandate for employers. (10) As a result, the current federal government's policy of administrative uniformity in providing employee benefits across the nation apparently supersedes the need for greater health care coverage for all. (11)

   Since the federal government has failed to cover forty-seven million Americans, states may still attempt health care reform, but several significant obstacles exist. Specifically, the four main problems presented by the current state models of health care in America are: ERISA preemption of state health care employer mandates; compliance with state individual mandates or tax incentives for employers to obtain health insurance; continuity of coverage regardless of life situation; and fraud and abuse issues in single payer systems such as Medicaid in New York State, including quality of care issues concerning the type and number of health care providers a particular insured patient can utilize. Based on these problems inherent in different models of state health care programs, a comprehensive plan must be adopted to provide meaningful health care coverage for all Americans and high quality care. Therefore, I propose a comprehensive nationally administered health care plan providing equal and continuous coverage to all Americans in the United States, which works in conjunction with an administrative body to enforce health care quality and compliance standards, with premiums so low that people will never decide to forego health care for other life necessities.

   The pressing issue of health care reform led 2008 Presidential candidates, now President Barack Obama and Secretary of State Hillary Clinton, to propose models of near universal health care coverage for all Americans. (12) These plans call for meaningful health insurance using both individual and employer mandates, but problems may still arise concerning compliance, affordability, and quality of health care. (13) As problematic as these issues may be, the significant obstacles facing state attempts at meaningful health care reform require the federal government to nationally implement such health care mandates or other programs to cover the forty-seven million uninsured Americans.

   To further explore the range of options to provide greater and higher quality health care insurance and benefits to more Americans, one must understand the current situation of health care in the United States, state reform attempts, federal programs, and other proposed actions. The purpose of this Comment is to demonstrate the best approach to providing comprehensive health care coverage to more Americans is on a federal level due to the obstacles facing state health care reform. Therefore, this Comment is divided into five parts: Part II summarizes the current state of employer-provided health care in the United States; Part III examines ERISA, its policy, and preemption doctrine; Part IV explores the various state health care reforms and their interaction with ERISA in Maryland, New York, and California; Part V reviews state alternatives to pure employer mandates in Massachusetts and New York; and Part VI explores a national approach to providing health care coverage by evaluating the different strategies the former 2008 presidential candidates advanced in their campaigns, specifically comparing the universal-mandate plan against the child-mandate plan. Finally, this Comment concludes by acknowledging the best approach to providing more Americans health care coverage is by implementing a nationally administered plan.

2. CURRENT STATE OF EMPLOYER-PROVIDED HEALTH CARE IN THE UNITED STATES

   In the United States of America, health insurance is generally accessed through employer-provided benefits. (14) Unfortunately, having a job does not automatically translate into having health insurance, since 82% of Americans without health insurance are in families with at least one part time worker. (15) This problem mostly occurs because many employers either cannot afford to pay rising health care costs and premiums for their employees, or refuse to do so. (16) Specifically, "[s]ince 2001, premiums for family coverage have increased 78%, while wages have gone up 19%," resulting in fewer employers offering health insurance or fewer employees enrolling in health insurance. (17) This is especially true for low-income workers, whose employers are less likely to provide health benefits, so health care premiums are unaffordable either provided through the employer's group plan or individually purchased. (18) Furthermore, even if an employer offers health care benefits, insurance may not cover the employee's family, or may do so at an even higher cost. (19) In 2007, employees paid average premiums of $2,831, or 28% of the cost for family coverage, versus $759 or 16% of premiums for individual coverage. (20) Fortunately, the State Children's Health Insurance Program and Medicaid have less stringent income requirements for families with children, so more poor children are insured that way. (21)

   Although many low-income workers do not have health insurance through their employer, they may not be wholly without opportunity for some health care coverage. Requirements vary by state, but generally people below the federal poverty line may be eligible for Medicaid. (22) However, most of the people without health insurance are not below the federal poverty line, but cannot afford to pay health insurance premiums privately when employers fail to provide adequate coverage. (23) Therefore, some measure of reform is required to bridge the gap for health insurance between low-income people on Medicaid and those with comprehensive health insurance through their employer. The most obvious way to change this is to mandate that all employers provide comprehensive health insurance to every employee, but with the Employee Retirement Income Security Act of 1974's broad preemption of all state laws relating to an employee benefit plan, the most obvious route to reform is not the easiest. (24)

3. EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974

   1. Purpose and Background of ERISA

      In 1974, Congress enacted the Employee Retirement Income Security Act (25) ("ERISA") as a way to regulate the growing size and complexity of private pension plans offered by employers to their employees. (26) Since employee benefit plans had become more common to offer to employees in lieu of higher salaries due to favorable tax treatment, Congress intervened to regulate these benefits. (27) The driving force behind ERISA was financial inadequacy or faulty plan provisions failing to properly vest employees with accrued benefits, thus leaving retirees with little to no employer provided benefits, defeating their employment expectations. (28) Also, inconsistency in employee benefit administration often led to termination of benefits that employees relied upon for retirement. (29) To combat this inconsistency, ERISA set minimum standards for employee benefit plans and disclosure requirements to "assur[e] the equitable character of...