ERIC memorandum template
ERIC
Congress

THE ERISA COMMITTEE

<nobr>May 22, 2007</nobr>

ERIC Statement for the Record for Hearing on Health Care Reform Recommendations to Improve Coordination of Federal and State Initiatives

Statement Submitted for the Record by
The ERISA Industry Committee

Before the House Committee on Education and Labor,
Health, Employment, Labor and Pensions Subcommittee

Hearing on Health Care Reform Recommendations to
Improve Coordination of Federal and State Initiatives

Mr. Chairman, Ranking Member Kline and Committee Members:

Thank you for the opportunity to voice the point of view of major employers that directly sponsor voluntary health-care benefit plans for tens of millions of Americans. Today's hearing addresses the issue of state and federal initiatives to expand access and coverage, and the importance of ERISA protections for national health care plans. The ERISA Industry Committee (ERIC) is a non-profit trade association committed to the advancement of employee health, retirement, and compensation plans of America's largest employers. We represent exclusively the employee benefit interests of major employers. ERIC has a strong interest in economic policy affecting our members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in America's economy.

Members of ERIC directly sponsor health care and pension plans that cover tens of millions of Americans, providing them the freedom to pursue career opportunities without fear of financial ruin from health care expenses. The employer-sponsored health care system, specifically with support of the national uniformity provisions in ERISA, has allowed American employers to provide workers with the best retirement and health benefits in the global market.

ERISA has played a vital role over the course of the past decades in protecting the health care coverage of American workers and their families, whose employers provide quality health care benefits. Over 160 million Americans have enjoyed the financial security provided by quality, voluntary health care benefits sponsored by major employers across the country.

Health care costs have persisted in rising in the double-digits for many years, significantly higher than the costs attributable to most companies' core operations. The driving force behind important innovations that have slowed this rise, increasing quality of health care and health insurance for workers while simultaneously controlling costs, have been major employers. Through strategies like drug therapy, disease management and prevention, the medical home model, voluntary mental health coverage, advances in health information technology and personal health records, consumer-driven health plans, value-based purchasing and pay-for-performance initiatives, transparency programs, and myriad other innovations, major employers have brought competition, openness, and improvement to the United States' health care market. This has resulted in vast increases in quality for patients and purchasers, while at the same time helping to curb rising costs.

The erosion of ERISA preemption protections would threaten the affordable and accessible health insurance coverage provided to American workers. Major employers, not legislators or government, have been responsible for the most important improvements in health care in the United States. An employer is attuned to the specific needs of its own workforce, and can better design plan offerings that will meet the needs of its workers, regardless of where they are employed, where they live, or where their medical providers are located.

Rather than the drastic and possibly disastrous proposition of removing ERISA protections from national employer-sponsored health care plans, Congress should consider being proactive in some of the areas that American health care is severely lacking:

We lag behind other countries in implementation of health information technology and electronic health records. American citizens, on average, have no medical home or primary care physician -- driving them to unnecessary emergency room care and inflating the costs of treatments. Health plans in the United States, especially those sponsored or managed by the government, place little emphasis on prevention and disease management, which are the best methods to improve health and control costs. Individuals do not have tax parity with employers in the purchasing of health insurance. Small businesses may not band together to create more powerful purchasing pools. The health care market in the U.S. is misaligned -- it is easier to find information on the cost and quality of televisions and MP3 players than on doctors and hospitals.

With all of these (and many other) glaring flaws in the U.S. health care system, there is much to be done that can positively impact access and coverage without threatening the health insurance already provided to more than half of Americans. ERISA has made providing coverage to employees spread across the country affordable and practical, allowing major employers to adhere to rules made by Congress and the Department of Labor -- not forcing them to construct a different plan in every state, or worse, every county or city.

Encroaching state and local health care mandates have threatened employers' ERISA protections, raising the specter of vastly increased administrative costs, severely decreased bargaining leverage for plan sponsors, and a balkanized system of coverage. When employers negotiate rates for uniform plans to cover thousands of employees across the country, it allows them to secure the lowest possible premium costs and ensure the most affordable coverage for plan beneficiaries.

While we applaud the efforts of this Committee to explore options that may expand much-needed access and coverage to the more than 40 million uninsured Americans, ERIC members urge you to avoid actions that could jeopardize the positive aspects of our current system. There are many proven ways to expand access, lower the barriers of high costs, and increase coverage for uninsured Americans that will not threaten the affordable and comprehensive coverage offered by major employers.

ERISA preemption of conflicting state regulations has been an invaluable tool in safeguarding the coverage currently provided to more than 160 million American workers and their families, and we urge you to take this into account when evaluating options to bolster state initiatives. We look forward to working with Congress to further efforts that will bolster the voluntary employer-sponsored benefits system, expand coverage for the uninsured, and improve the quality of health care in the U.S.

Thank you for considering the views of America's largest employers, who sponsor health insurance for so many American workers.

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