Legislation	Secretary of Senate	Members	Committees	Meetings	Home	House

SR 10 - Self-Fund.Employer-Based Hlth.Plan- petitioning for state regulation

Thomas, Nadine (10th)

Status Summary	SC:	I&L	HC:		FR:	01/14/99	LA:	01/14/99	S - Read 1st time

First Reader Summary

A resolution memorializing the United States Congress to amend ERISA to grant authority to the several states to regulate self-funded employer-based health plans.

SR 10  99                                          LC 19 3992 
 
      SENATE RESOLUTION 10 
 
      By:  Senator Thomas of the 10th 
 
 
                             A RESOLUTION 
 
  1- 1  Memorializing the United States Congress to amend ERISA to 
  1- 2  grant authority to the several states to regulate 
  1- 3  self-funded employer-based health plans; and for other 
  1- 4  purposes. 
 
  1- 5  WHEREAS, the McCarran-Ferguson Act, passed by the United 
  1- 6  States Congress in 1945, established a statutory framework 
  1- 7  whereby responsibility for regulating insurance and the 
  1- 8  insurance industry was left largely to the states; and 
 
  1- 9  WHEREAS, the Employee Retirement Income Security Act of 1974 
  1-10  (ERISA) significantly altered this concept by creating a 
  1-11  federal framework for regulating employer-based pension and 
  1-12  welfare benefit plans, including health plans; and 
 
  1-13  WHEREAS, ERISA preemption effectively prohibits states from 
  1-14  directly regulating most employer-based health plans, which 
  1-15  are not deemed to be "insurance" for purposes of Stark laws 
  1-16  which results in ERISA preemption from state regulation; and 
 
  1-17  WHEREAS, over the past 24 years, state governments have 
  1-18  gradually come to realize that ERISA is an impediment to 
  1-19  ensuring adequate consumer protections for all individuals 
  1-20  with employer-based health care coverage and to enacting 
  1-21  administrative simplification and cost reduction reforms 
  1-22  that could improve the efficiency and equity of their health 
  1-23  care markets; and 
 
  1-24  WHEREAS, available data suggest that self-funding of 
  1-25  employer-based health plans is increasing at a significant 
  1-26  rate, both among larger and smaller businesses; and 
 
  1-27  WHEREAS, between 1989 and 1993, the General Accounting 
  1-28  Office estimates that the number of self-funded plan 
  1-29  enrollees increased by about six million individuals; and 
 
  1-30  WHEREAS, approximately 40 to 50 percent of employer-based 
  1-31  health plans are presently self-funded by employers, who 
  1-32  retain most or all of the financial risk for their 
  1-33  respective health plans; and 
 
 
 
 
 
                                 -1- 
 
 
 
  2- 1  WHEREAS, as self-funding of health plans has grown, states 
  2- 2  have lost regulatory oversight over a growing portion of the 
  2- 3  health market; and 
 
  2- 4  WHEREAS, as this phenomenon continues, state governments are 
  2- 5  slowly but surely losing their ability to manage their 
  2- 6  health care markets; and 
 
  2- 7  WHEREAS, given the improbability of federal reforms to 
  2- 8  achieve universal health coverage in the near future, many 
  2- 9  state legislatures are seeking an active role in expanding 
  2-10  the number of individuals covered by an insurance plan and 
  2-11  in controlling health care costs and regulating abuses; and 
 
  2-12  WHEREAS, in a very real sense, ERISA preemption is an 
  2-13  obstacle to the states' adopting a wide range of health care 
  2-14  reform strategies; and 
 
  2-15  WHEREAS, employers are increasingly adopting funding methods 
  2-16  for their health plans that blur the distinction between 
  2-17  self-funded and fully insured, including more extensive use 
  2-18  of stop-loss coverage and risk-sharing arrangements with 
  2-19  managed care organizations; and 
 
  2-20  WHEREAS, these innovative funding methods have so blurred 
  2-21  the distinction between self-funded and fully insured health 
  2-22  plans that many experts argue that there is no real 
  2-23  distinction at all; and 
 
  2-24  WHEREAS, the states' inability to protect consumers enrolled 
  2-25  in self-funded health plans from employers or plans who fail 
  2-26  to provide the consumers' anticipated level of health care 
  2-27  is gradually eroding the public's confidence in government, 
  2-28  even as self-funded plans are afforded an unfair advantage 
  2-29  over traditional health insurance providers due to lack of 
  2-30  state or federal accountability, regulation, or remedy for 
  2-31  the individual members of ERISA plans confronting insurance 
  2-32  denials; and 
 
  2-33  WHEREAS, many ERISA plan participants and their dependents 
  2-34  have died or been permanently injured because courts have 
  2-35  narrowly interpreted ERISA's remedy provisions and broadly 
  2-36  interpreted ERISA's preemption provisions thereby creating a 
  2-37  substantial economic incentive for plan administrators to 
  2-38  deny medically necessary benefits legitimately covered under 
  2-39  ERISA plans; and 
 
  2-40  WHEREAS, the time has now come for the several states to 
  2-41  aggressively seek changes in ERISA to give them more 
  2-42  flexibility in regulating health plans at the state level 
 
 
                                 -2- 
 
 
 
  3- 1  and to increase access to health care and to lower health 
  3- 2  costs. 
 
  3- 3  NOW, THEREFORE, BE IT RESOLVED BY THE SENATE that the 
  3- 4  members of this body memorialize the United States Congress 
  3- 5  to amend the Employment Retirement Income Security Act of 
  3- 6  1974 (ERISA) to grant authority to all individual states to 
  3- 7  monitor and regulate self-funded employer-based health plans 
  3- 8  in the interest of providing greater consumer protection and 
  3- 9  effecting significant health care reforms at the state level 
  3-10  through the office of the state Insurance Commissioner and 
  3-11  with legal enforcement through the state Attorney General's 
  3-12  office.  Additionally, there shall be cooperative receipt of 
  3-13  referral of complaints from the United States Department of 
  3-14  Labor to the state Attorney General and the state Insurance 
  3-15  Commissioner for regulation and timely enforcement. 
 
  3-16  BE IT FURTHER RESOLVED that Congress is urged to amend ERISA 
  3-17  so that employers shall be immune from prosecution within an 
  3-18  ERISA claim and shall have the right to remain self-funded 
  3-19  without risk of liability through ERISA plans.  ERISA 
  3-20  section 502(a)(1)(B) currently reads as follows: 
 
  3-21        "(B) To recover benefits due to him under the terms of 
  3-22        his plan, to enforce his rights under the terms of the 
  3-23        plan, or to clarify his rights to future benefits 
  3-24        under the terms of the plan;" 
 
  3-25  The Senate urges the United States Congress to amend such 
  3-26  ERISA section to read as follows: 
 
  3-27        "(B) To recover benefits due to him under the terms of 
  3-28        his plan, to recover from the fiduciary compensatory 
  3-29        damages caused by the fiduciary's failure to pay 
  3-30        benefits due under the terms of the plan, to enforce 
  3-31        his rights under the terms of the plan, to timely 
  3-32        authorize assurance of payment, or clarify his rights 
  3-33        to future benefits under the terms of the plan;" 
 
  3-34  BE IT FURTHER RESOLVED that the Senate most fervently urges 
  3-35  and encourages each state legislative body of the United 
  3-36  States of America to enact this resolution, or one similar 
  3-37  in context and form, as a show of solidarity in petitioning 
  3-38  the federal government for greater state authority in 
  3-39  regulating self-funded employer-based health plans. 
 
  3-40  BE IT FURTHER RESOLVED that the Secretary of the Senate is 
  3-41  authorized and directed to transmit appropriate copies of 
  3-42  this resolution to the President of the United States, the 
 
 
 
                                 -3- 
 
 
 
  4- 1  Secretary of the United States Department of Labor, the 
  4- 2  Speaker and the Clerk of the United States House of 
  4- 3  Representatives, the President and the Secretary of the 
  4- 4  United States Senate, each member of the Georgia 
  4- 5  congressional delegation, and the presiding officer of each 
  4- 6  house of each state legislative body in the United States of 
  4- 7  America. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                 -4-