Chapter 9.C (or 3.C) -- ERISA Pre-emption

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In Kentucky Association of Health Plans v. Miller, 538 U.S. ___ (2003), the Supreme Court upheld the power of states to enact any-willing provider statutes, under ERISA’s insurance regulation savings clause.  In doing so, the Court made a “clean break” from its previous reliance on the three-part McCarran-Ferguson definition of insurance regulation.  Instead, it adopted the following two-part test to capture the ordinary meaning of insurance regulation:  “First, the state law must be specifically directed toward entities engaged in insurance. . .. Second. . . the state law must substantially affect the risk pooling arrangement between the insurer and insured.”  See Sharon Reece, Puncturing the funnel--saving the "any willing provider" statutes from ERISA preemption, 27 U. Ark. Little Rock L. Rev. 407-454 (2005).

For a thorough analysis of the particular legal issues in the Bartlett case and their public policy implications, see Russell Korobkin, The Battle over Self-Insured Health Plans, or "One Good Loophole Deserves Another," 5 Yale J. Health Policy, L. & Ethics 1 (2005), who argues that the case was wrongly decided and is cast in doubt by the Supreme Court's subsequent decision in Kentucky Association (noted above).

Another important ERISA ruling came from the District Court in Maryland, relating to that state's new  "Wal-Mart" law that requires employers with more than 10,000 workers who do not spend at least 8% of their payroll on health benefits to pay the difference to the state's Medicaid fund.  The court held that this "play or pay" law is pre-empted by ERISA, even though the requirement to provide health benefits is framed as way of avoiding a special tax, because "no rational employer would chooose to pay the State" rather than provide their own employees better benefits.  Retail Industry Leaders Association v. Fielder, D. Md., No. 06-316, 7/19/06.

Regarding preemption under Medicare of claims against private Medicare insurers, see Note, 24 Rev. Litig. 125-148 (2005).

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