Thoughts on the Health Insurance Marketplace Modernization and Affordability Act

Ann Bartow (South Carolina and Feminist Law Professors) had a post the other day on the so-called Enzi bill that the Senate is considering to make health insurance more affordable for small businesses by allowing them to pool together to purchase health insurance (I previously blogged about the concept of pooling here).

As Ann (through Families USA and the AFL-CIO blog) points out, one of the lesser known parts of the bill is that under the proposed law, "[s]tates will no longer be able to mandate coverage of benefits, services, or categories of providers for individuals, small groups, or large groups."

While all of this is indeed very troubling, it actually does not enact a large of a change in the law of employee benefits as one might think.  This is because of ERISA preemption. 

As I have described in a number of other posts (one example is here), if a health insurance plan is self-insured, then under the ERISA preemption scheme, state mandated benefits law, like the ones impacted by the Enzi pooling bill, would be preempted anyway.  This has been the law since the mid-1980s when the court decided the Metropolitan Edison case.

Additionally, statistics show that more and more employers are adopting self-insured health plans to avoid being subject to state insurance regulation like mandated benefit laws.  Indeed, even for small businesses like the ones impacted by the Enzi bill who usually could not afford to self-insure, they can buy something called stop loss insurance (explained more here) with a low "attachment point" which allows them to run a self-insurance plan but with insurance-like protection.

Not that any of this is good news for people who should have the additional insurance coverage states mandate. But given the nature of ERISA preemption and the increased use of self-insurance and stop loss insurance, the Enzi bill might have less impact in this area than some might have originally thought.

PS