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One Set of Rules Means Lower Costs for Health Care


And why it matters for employer-provided coverage.

Published Aug 7, 2023 • by AHIP

There’s a lot of benefit to using standardized regulations to create simple, easy systems.

Getting health insurance through the workplace should be simple and straightforward. The last thing that employers, employees, and their families need is to jump through hoops or navigate multiple, complex regulations just to get the coverage and care they need at a cost that they can afford.

Luckily, there is an effective, nationwide system and set of standards in place for employer-provided health care coverage. It began back in 1974 when Congress passed the Employee Retirement Income Security Act (ERISA). Group health plans sponsored under and governed by ERISA are cost effective and allow employers to provide uniform benefits regardless of where you live, because ERISA preempts state and local law. Preemption just means ERISA, as a federal law, governs these plans in uniform ways and supersedes any patchwork of state laws or regulations that threaten to introduce unnecessary complexity back into the system.

For nearly 50 years, this law has been a cornerstone of the American health care system. Weakening or eroding ERISA preemption would lead to employers — especially large multi-state or national employers — having to navigate and comply with up to 51 different state regulations. It would also impact the important employer flexibility ERISA preemption has protected and fostered, and employers have long relied upon, to design and administer the types of plans that best meet the needs of their employees. Fewer employers would be able to offer comprehensive health coverage, and costs would rise for those that do. With a burdensome system of multiple, conflicting rules and mandates, health insurance plans will become much more complex, not less.

And that’s why a new problem is of grave concern: the uniform standards made possible by ERISA preemption are under real threat by the judiciary and lawmakers at both the federal and state level. The Supreme Court has empowered states to test the boundaries of ERISA preemption with regard to how drug benefits are delivered. One case currently being considered in the Eighth Circuit, originating from a law passed in Oklahoma, could give the state the authority to make decisions regarding which providers and pharmacies are included in plan networks. In the state, the employer plans were already regulated by federal ERISA law, and the ruling has resulted in confusing requirements for health insurance providers, employers, and consumers across the country.

Again, the real problems aren’t just that more rules and regulations are cumbersome and potentially in conflict with one another — they’re ultimately expensive for employers and workers alike. Any added complexities or extra expenses mean less resources are available for benefits for employees or that higher premiums must make up for the difference. Eroding ERISA preemption is bad for American companies, workers, and our health care system.

Protecting against this threat is especially important to AHIP and its members that have continually raised the alarm — and support is growing. Recently, groups including the American Benefits Council, National Alliance of Healthcare Purchaser Coalitions, National Association of Manufacturers, and the U.S. Chamber of Commerce urged members of Congress to uphold and protect the law, calling an erosion of ERISA a “dangerous precedent” that will reduce health insurance coverage for American families.

It’s clear that millions of hardworking Americans and their family members are counting on the federal government to continue and build upon what’s already working to keep health coverage available and health care costs reasonable. They can’t afford for lawmakers to go backward on this commitment.


Coverage@Work (C@W) is a campaign to educate policymakers and the public about the value employer-provided coverage delivers to over 180 million Americans. C@W supports and advocates for market-based solutions that advance health, choice, affordability, and value for every American.