Is ERISA Preemption Superfluous in the New Age of Health Care Reform?

Sunday, January 15th, 2012 at 9:23 am by Mallory Jensen

Mallory Jensen, Is ERISA Preemption Superfluous in the New Age of Health Care Reform?, 2011 Colum. Bus. L. Rev. 464.

In June 2010, the Department of Justice (DOJ) submitted a brief to the United States Supreme Court opposing the grant of certiorari in litigation over the legality of San Francisco’s recent health reform law. The claim in the case was that ERISA, which had long preempted a variety of state health reform efforts, also preempted the San Francisco reform. The DOJ, however, recommended against Supreme Court review in large part because of the new federal health care reform law, the Affordable Care Act (“ACA”), had recently been enacted, and even the government was unprepared to predict with confidence its effect on previously settled areas of law like the one at issue in San Francisco. Because the federal reform was so new, the DOJ argued, it was premature for the Court to hear the case.

But the ACA is no longer so new, and though Supreme Court review of the question arising from the San Francisco reform may not have been advisable, it is critical to obtain more clarity now about the ACA’s interaction with other major laws. In particular, one of the principal sources of uncertainty is the ACA’s relationship to ERISA. ERISA preempts any state laws that “relate to” employer-provided health benefits. Although the ACA is a federal law and thus not preempted by ERISA itself, the states must implement much of it. Yet despite ERISA’s reputation as a state reform-killer, Congress did not address whether it would have any preemptive effect once the ACA rolled out. Can the states implement reforms mandated with the ACA without running afoul of ERISA? What about ERISA’s effects on states’ non-ACA reforms going forward? And then there is the middle ground: state reform plans that receive waivers through the ACA. These have recently received much publicity, but will state reforms that get an ACA waiver be able to avoid ERISA preemption?

As the DOJ noted, at this point the answers to these questions are still unclear. For reform to move forward, it is necessary to promptly determine whether reform may be hamstrung by ERISA preemption, or whether reform makes the preemption issue superfluous. The answer to that important question will come not in the high-profile litigation and political maneuvering by states and others seeking to block reform, but through case-by-case interpretations of the laws and their interactions.

This Note examines the likely interplay between ERISA and the ACA as the ACA is implemented. Many state and federal regulations still must be written to implement the ACA, and many forces at both the state and federal level oppose the ACA’s very existence. As a result, the uncertainty that the DOJ noted about ERISA preemption’s new role in light of the ACA’s enactment will continue for now. However, ERISA was a major force in health care law prior to the ACA and will continue to play a large role; barring total dismantlement of the ACA, the ACA too will shape the field for many years. Indeed, one might argue that the combination of the two laws will make them, and ERISA’s preemptive effect, even stronger, by demonstrating the federal government’s intention to occupy the field of health care. Accordingly, the interaction of the ACA and ERISA is a crucial piece of the puzzle of what health care law and policy will look like in the future. By examining their text, purpose, and interpretation by courts (or likely interpretation, in the case of the ACA), and discussing ERISA preemption’s future, both for the ACA and otherwise, this Note begins to fit that piece into place.

This Note analyzes the issue of ACA and ERISA interaction in terms of two major stages, mirroring the relevant stages of the ACA’s implementation, before making general recommendations and predictions. Part II explains the pre-ACA landscape of ERISA preemption, briefly reviewing ERISA’s history and interpretation as well as its impact on previous attempts at health reform. Part III examines how this landscape has changed post-ACA enactment, and how it will continue to change as the ACA is implemented. In particular, that Part will examine the ACA provision allowing states to obtain waivers that would allow them to conduct their own health reform programs and how this implicates ERISA preemption. Part IV identifies some problems with ERISA preemption that remain despite the enactment of the ACA and suggests a few possible solutions.

Author Information

J.D. Candidate 2012, Columbia University School of Law; B.A. Columbia University.