In 1974 Congress passed the Employee Retirement Income Security Act (ERISA). The Act affected far more than retirement income including subjecting employer self-funded health benefit plans to federal and not state insurance laws. It was understood that large corporations operating in many states would go crazy attempting to comply with fifty different sets of rules, regulations and mandates for their health benefits. Over 50 million workers and their dependents receive health coverage through their employer self-funded health plan. Nearly 59% of workers are covered by such plans according to the Employee Benefit Research Institute.
These employers hire insurance companies or other administrators to pay claims, establish networks, in many cases to adjudicate appeals and other administrative work. The design of the plan and premiums charged employees are controlled by the employer subject to federal, not state laws.
To me this seems rather logical. However, when it comes to insured health plans each state does its own thing, has its own mandated benefits, reviews proposed premiums in its own way. In some cases the state can approve or deny a premium request, in others not so much. Needless to say the states strongly defend their rights in all this? But why? Do citizens in California deserve different health benefits than in Alabama? What is the cost of requiring insurance companies to comply with fifty different laws and file fifty different premium requests? Does one state know more than another state? If Americans 65 and over can be covered by one set of rules, why not everyone?
There should be no state mandated benefits. Provider fees should be negotiated regionally so there is one set of fees paid by all insurance companies. There should be one set of rules and regulations, with consistency among the states. Provider contacts should be eliminated and replaced with a single fee payment and claim process followed by each insurer. This will generate tremendous savings in administrative costs while leaving plenty of areas in which insurers can compete.
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