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Saving The Public Option Is A Two Step Process

By Igor Volsky on January 11, 2010 at 5:05 pm

"Saving The Public Option Is A Two Step Process"

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Sen. Harry Reid (D-NV) and Rep. Nancy Pelosi (D-CA)Last week, I suggested that progressives could salvage the vestiges of the national public health insurance option by including a provision in the final health care bill that provides start-up funds to states that choose to create state-based public options. But adding the provision may not be as easy as it seems. The Center for Policy Analysis reminds me that “Some state and local governments that have attempted to expand health care coverage have been successfully challenged in court under the terms of the Employee Retirement Income Security Act of 1974 (ERISA)” and if the health care bill does not grant an “ERISA waiver” to states that chose to establish a public option, they may find themselves in court.

Congress enacted ERISA in 1974 to allow companies operating across state lines to offer uniform benefit packages. ERISA preempts states from enacting legislation if it is “related to” employee benefit plans. It reserves that right to the federal government. Section 514 of ERISA states that Title V (Administration and Enforcement) and Title IV (Fiduciary Responsibility) of ERISA “shall supersede any and all State laws insofar as they may… relate to any employee benefit plan.”

Hawaii successfully won a preemption battle in 1983 that allowed the state to enact an employer mandate, but single-payer advocates have also challenged the clause. During the House Education and Labor Committee’s mark-up, Rep Dennis Kucinich (D-OH) introduced an amendment that would authorize and require “the Secretary of Labor, in consultation with the Secretary of Health and Human Services” to waive the ERISA pre-emption (Sec. 514) for states that have enacted a state single payer system. The committee adopted the amendment, but it was left out of the final House bill.

It’s unclear if progressives have the votes to pass the state-based public option in the Senate, but if they do, they should include the ERISA waiver to ensure its viability.

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