State Cost-Control Reforms and ERISA Preemption

Commonwealth Fund May 16, 2022
Elizabeth Y. McCuskey

Toplines

Federal ERISA law doesn’t preempt many state reform efforts to control health care costs, but that’s not the case with changes that apply to employers’ self-funded plans

Despite the risk of ERISA preemption, states continue to pursue incremental reforms to reduce rapidly rising health care costs

Abstract

• Issue: State legislators continue to pursue reforms aimed at reducing health care costs. But the federal Employee Retirement Income Security Act (ERISA) threatens enforcement of state laws that impact employer-sponsored health insurance, especially the self-funded plans that comprise 64 percent of employer-sponsored coverage. ERISA preempts state laws directly targeting these plans and stretches into topics with only a tangential relationship to employer insurance. Preemption dilutes states’ ability to collect data, control...

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