The Employee Retirement Income Security Act of 1974 (ERISA) is a federal law that sets minimum standards for most voluntarily established pension and health plans in private industry to provide protection for individuals in these plans. What began as a law to provide minimum standards and protections for private benefit plans has become a major obstacle to health insurance reform.
A state can mandate an individual to buy health insurance, but it can’t mandate a business to provide insurance, because of ERISA.
A state can mandate certain benefit levels for insurance coverage, but it cannot mandate those benefits for businesses that are self insured (and approximately 58% of New England businesses provide self-insured health insurance. The newly set Connector minimal creditable coverage can be mandated for individuals to buy, but the Commonwealth cannot mandate businesses to provide that coverage.
The state can mandate an individual to pay for health insurance, but it can’t mandate a payroll tax on employers who don’t provide insurance, because of ERISA.
State health care reform efforts will remain limited and under-funded because of the inability of states to mandate businesses to help fund insurance for their employees. Business owners who are progressive and forward thinking will do the right thing, and these are the majority in the Commonwealth. However, there will always be businesses that are financially weak or who worry only about the bottom line, and they will always find a way to pass on their social responsibility to provide health care to taxpayers.
Because of ERISA protections, two large Massachusetts corporations, Wal-Mart and Stop & Shop pass on the health care costs of 6,367 workers (and their families totaling 11,828 individuals) each year to the Uncompensated Care Pool, which we all pay for.
States need to begin experimenting to solve the growing problem of access to health care, like we are trying to do here in Massachusetts.
But no state can solve this problem on its own, as long as ERISA protects businesses and allows them to decide whether or not they want to play (and pay) for their workers’ health care.
State solutions can only go so far without changes on the federal level. Changes need to happen here, close to home, but also need to begin to happen in D.C.
Celia Wcislo, Assistant Division Director, 1199SEIU, MA Division
and member of the Connector Authority board
Rather than beat Stop & shop and Wal-Mart with your stick, do you have any statistics about how many OTHER Mass. businesses do not provide benefits to part-time employees?
Do you have statistics about how many feel-good non-profits don’t provide benefits to FULL TIME employees?
Talk to any Polaroid retiree, now that the company has gone bankrupt, and ask them if they would rather have paid a larger share of benefit, or lose benefit entirely. THAT is what ERISA does – it freezes contibution rates in stone, and makes it impossible for companies which are overwhelmed to change them.
You say, “However, there will always be businesses that are financially weak or who worry only about the bottom line, and they will always find a way to pass on their social responsibility to provide health care to taxpayers.” Are you suggesting that, if a business is financially weak, federal law should nonetheless require it to make these contributions? More generally, why would it be the social responsibility of a financially weak business to further weaken its financial condition? Perhaps it would be more socially responsible to provide fewer benefits to employees but continue to provide jobs. Who should make that judgment — the business owner or the government? You seem to be suggesting that it should be the government.
As Andrew Dreyfus conveyed so effectively in his posting – and what your questions underscore – is the challenge of balancing employer, government, and individual responsibilities. I think many in our healthcare and business communities would say that we’ve found the right path to compromise here in Massachusetts and that’s the foundation of our healthcare expansion success. And as more individuals enroll in health insurance, we’ll find out how well we’re doing from their perspective.
If we’re ever to solve the issue of the uninsured on a national level, we need to focus with fresh eyes on finding the right balance. And yes, I would say a part of that balance is ensuring that there are basic standards employers should meet. After all, if employers don’t participate in the solution or are unable to participate, those costs are then carried by taxpayers.
Just as in Massachusetts, we’ll need everyone at the table – government, employer, and individuals to help forge the path to a solution.