ERISA, the Employee Retirement Income Security Act, transformed the health insurance landscape since its introduction over 50-years ago. It was initially designed to regulate worker pensions, but it has profoundly changed how health insurance is provided and regulated in the United States. In this article, we look back at how ERISA’s evolution and its influence on healthcare.
This week, the KFF Health News’ “What the Health?” podcast marked ERISA’s anniversary with host and KFF Health News chief Washington correspondent Julie Rovner leading the discussion about the act’s past, present, and future. The panel of experts included Larry Levitt from KFF, Paul Fronstin of the Employee Benefit Research Institute, and Ilyse Schuman from the American Benefits Council.
Impacting the U.S. Health System
Enacted in 1974, ERISA plays a role in almost every detail of health insurance. This legislation, famous for its pension benefits protections, surprisingly impacted the regulation of health benefits in the U.S. It was the result of a last-minute decision in the House-Senate Conference to add health benefits to ERISA’s scope.
ERISA now allows employers to offer uniform benefits across all 50 states, which has proven beneficial for companies with operations across different states. It has provided companies with the flexibility to design and implement health coverage that best meets their employees’ needs.
Regulation and Protection
ERISA plans are regulated federally, not by individual states. The legislation introduced valuable protections and disclosure requirements for all employees, benefiting many beyond those who work for self-funded employers.
ERISA legislation cracks down on state health reforms, but its preemption clause has kept employer coverage stable, enabling it to grow over time. This recognition highlights the substantial impact ERISA has had on the U.S. health system.
While it may be complicated for most to understand, ERISA has allowed employers to innovate and offer quality healthcare to working families. Furthermore, with the rise of remote work in the post-pandemic era, the need for uniformly administered benefits on a nationwide scale is more crucial than ever.
An Evolving Landscape
The protections provided by ERISA are not without challenges and scrutiny. A provision added through the Consolidated Appropriations Act increased transparency in self-insured employer plans, leading to several lawsuits questioning if these plans are acting as appropriate fiduciaries in getting the lowest costs for prescription drugs.
The biggest concern employers have regarding ERISA revolves around states trying to erode the preemption provision, which enables self-funded plans to be administered uniformly nationwide. The landscape is shifting, but one critical question remains – will ERISA be around in another 50 years?
While it’s too early to predict, the unique and instrumental role ERISA has played in shaping health insurance in the United States indicates its potential longevity. Whether ERISA will adapt and evolve to meet growing challenges in the healthcare arena remains to be seen, but it has already made a significant mark on the industry.
In Summary
Overall, ERISA has played a crucial role in shaping the U.S. health insurance sector. The post-pandemic landscape might highlight ERISA’s influence even more as employers increasingly adopt flexible worksites and arrangements. This allows for a more mobile and remote workforce so that they can administer uniform benefits on a nationwide scale, highlighting the importance of ERISA’s preemption provision.
As we look ahead, the discussion around ERISA’s existence in 50 years brings uncertainties, but one thing is for sure – ERISA has proven to be a vital part in providing quality healthcare to American families.