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Hearing Recap: ERISA Edition (Part II)

WASHINGTON, D.C., September 10, 2024
Today, the Health, Employment, Labor, and Pensions Subcommittee held a hearing commemorating the 50th anniversary of the Employee Retirement Income Security Act (ERISA) and the critical role that employer-sponsored coverage plays in delivering high-quality, low-cost health care. 
ERISA is a pillar of the American health care system, and its employer-sponsored coverage framework supports over half the nation. The vast majority of Americans on employer-sponsored health plans under ERISA express satisfaction with their coverage, yet they identify skyrocketing health care prices as a top concern. Therefore, the Committee took ERISA’s golden anniversary as an opportunity to discuss ways in which it can be further improved to lower health care costs.

Chairman Bob Good (R-VA) led the hearing by making the case for ERISA and for a brighter future of employer-led innovation. He stated, “At a time when many Americans are living paycheck to paycheck, and personal savings rates are near historic lows, rising health care costs driven by government interventions are unmanageable. Permitting ERISA plans room to expand and innovate is the solution.”

The witness panel featured experts including Ms. Ilyse Schuman, Senior Vice President of Health and Paid Leave Policy at the American Benefits Council; Ms. Holly Wade, Executive Director of the National Federation of Independent Business Research Center; and Dr. Paul Fronstin of the Employee Benefit Research Institute.

As the hearing shifted to questioning, Rep. Tim Walberg (R-MI) continued to underscore the importance of ERISA. After declaring ERISA a “cornerstone of American labor law,” he asked, “In what key ways has the health care industry changed since the passage of ERISA in 1974?”

“It has certainly become more complex and consolidated, but it has also become more innovative. And a lot of this innovation has been enabled and fueled by ERISA,” answered Ms. Schuman.

One way in which ERISA plays this vital, innovative role in the American health care system is through its preemption clause. By preempting the patchwork of state regulations, ERISA gives employers flexibility and breathing room in otherwise heavily burdened markets.

Rep. Eric Burlison (R-MO) emphasized how his constituents benefit from such preemption. “Being a former state legislator, I saw firsthand how a lot of employers were happy to move to an ERISA plan and escape all the state regulations …,” Rep. Burlison said, adding, “I can only imagine how difficult that would be if you had employees in multiple states.” 
Then, Members traded ideas about policies to help cool down the red-hot health care price inflation. Chairwoman Virginia Foxx (R-NC) presented one potential avenue to improving the health care market—targeting anticompetitive terms used in contracts between employers and providers. Rep. Aaron Bean (R-FL) opined that Congress could ban unnecessary facility fees that hospitals tack on to telehealth visits.

Finally, after an hour of constructive discussion, Rep. Bean addressed the elephant in the room: the looming alternative to ERISA. “If we went to a one-size-fits-all singer payer system, how devastating would that be to Americans and small businesses?” he asked.

Ms. Wade responded, “Small business owners would be less able to compete for talent and retaining current employees and attracting applicants for those positions if not given a choice.”

Nailed it. Extra government intervention just won’t cut it. More health care choice and options enabled by ERISA will create the best path towards lower costs for everyday Americans.

Bottom Line: ERISA’s 50th anniversary is cause for celebration, and, if we’re lucky, America will forge another 50 years of employer-sponsored health care innovation. 
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