Louisiana Department of Insurance
1702 North 3rd Street
Baton Rouge, LA 70802
Dear Mr. Opelka:
On behalf of The ERISA Industry Committee (ERIC), thank you for accepting input from interested stakeholders as you explore ways to stabilize Louisiana’s individual health insurance market through a reinsurance program. ERIC is the only national association that advocates exclusively for large employers on health, retirement, and compensation public policies at the federal, state, and local levels. We speak in one voice for our members on their benefit and compensation interests, including many members with employees and retirees in Louisiana.
Employers provide stable health care benefits to more than 181 million Americans—the largest source of health coverage in the country. More than 110 million of these individuals are enrolled in self-insured plans. In Louisiana, 42% of the population, approximately two million people, receive health insurance coverage through an employer-sponsored plan1. Assessments on employer-sponsored insurance, such as the one proposed in Act 412 (see statute 4 on page 9) have the potential to fiscally and administratively burden businesses that have been a source of quality, affordable health insurance for decades. The result will be higher costs for employers and workers, reduced stability for some employer-sponsored plans, and administrative burdens that jeopardize the national uniformity of benefits administration for plans governed the Employee Retirement Income Security Act of 1974 (ERISA). In turn, such a proposal could undermine stability in the Louisiana individual health insurance market, by making the reinsurance program vulnerable to an ERISA preemption challenge.
It is important to understand that ERISA preempts state laws that “relate to” employer-sponsored health plans. This preemption is applicable when a state law directly refers to ERISA plans or when it would impact ERISA plans either administratively or financially. Both cases for preemption apply here: there would be both an administrative and financial burden on ERISA plans to pay for and comply with this assessment. Placing an assessment on employers is not reinsurance; it is rather a redistribution of wealth from those with employer-sponsored health benefits, to those purchasing health care on the Affordable Care Act exchange in Louisiana. We understand the need for Louisiana to establish and fund its reinsurance program, but we urge you to exempt ERISA plans from the proposed assessment, as ERISA plans are exclusively regulated on the federal level.
To comply with this assessment, carriers, and self-insured plan sponsors will have to submit to the state information on their plan participants, so that an assessment amount can be calculated. This will be an additional reporting requirement added to the list of compliance burdens that plan sponsors already face, and for multi-state employers, would give rise to a patchwork of varying and conflicting state reporting requirements that is explicitly forbidden under ERISA. For example, in 2016, the U.S. Supreme Court found in Gobeille v. Liberty Mutual (557 US 2016) that Vermont’s health care claims database law was preempted from placing reporting requirements on ERISA plans. The reporting requirements that will be necessary for Louisiana’s reinsurance program will not be merely incidental but will be a crucial part of planning and running the reinsurance program, and as such will likely be preempted by ERISA.
In conclusion, placing an assessment on employer-sponsored health plans will undoubtedly increase costs for employees and their beneficiaries. To offset the impact, employers will be forced to pass on some of these costs to Louisiana employees. What may be considered a small increase in cost could have a significant impact on some individuals, and it could cause plan beneficiaries to forego needed coverage or care.
So long as the funding mechanism for a reinsurance program includes an assessment on ERISA plans, we will oppose the legislation.
Thank you for accepting our input during this period of public commentary. If you have any questions or if we can be of further assistance, please contact me at email@example.com or (202) 627-1914.
The ERISA Industry Committee
Louisiana Business Group on Health