ERISA Preemption: A Vital Protection for Health Coverage

For 180 million American workers and their families who depend on personalized coverage for their health and financial security, the Employee Retirement Security Act of 1974 (ERISA) is the cornerstone of their insurance. When Congress passed ERISA more than four decades ago, policymakers included a broad and robust express preemption clause to protect against inconsistent state laws and ensure uniform, equitable and affordable benefits regardless of where Americans live or work. Importantly, ERISA also establishes standards of conduct for plan sponsors and employers, including transparency and safeguards around benefits, even in the case of a company facing bankruptcy.

As the American workforce becomes increasingly diverse, today’s employees need and benefit from ERISA’s preemption of inconsistent and overlapping state laws more than ever. By mitigating the harmful cost and health consequences of a patchwork of state regulation, ERISA preemption prevents disparities in coverage and benefits that would otherwise disadvantage employees in certain states.

Yet, recent legal challenges to ERISA, including the case of Rutledge v. PCMA pending in front of the U.S. Supreme Court, threaten to upend the backbone of the employer-sponsored insurance program and the coverage that American workers have come to rely on during the latest public health emergency. By allowing individual states to chip away at these vital federal ERISA protections, plan sponsors and employers would be faced with myriad conflicting state laws that would add far greater costs to employees’ health benefits and coverage. The result? Employees who work at multi-state companies would not have equal coverage or benefits relative to their colleagues—for example, some may pay more for their prescription drugs, face significant increases in their health insurance premiums or a reduction in benefits altogether because of state laws or local mandates.

Eroding ERISA preemption would lead to a health system that is inherently unfair to American workers and their families and unworkable for employers. Which is why the U.S. Chamber of Commerce (“the Chamber”), the American Benefits Council and other voices for employers, plan sponsors and American workers have urged the U.S. Supreme Court to maintain ERISA’s essential preemption safeguards. In an amicus brief ahead of oral arguments, the Chamber and American Benefits Council note that, “the administrative burdens imposed by conflicting state laws are no mere theoretical concerns. They have concrete consequences for many Americans…Evidence shows that ‘each one percent increase … in plans’ costs … results in a potential loss of insurance coverage for about 315,000 individuals.”

Now, more than ever, American workers should not face uncertainty or a federal threat to their coverage. Congress and the U.S. Supreme Court have made it clear and reaffirmed the fundamental protections of ERISA and federal preemption over the past 40 years. Those safeguards are as essential as ever.

About the authors

Katie Mahoney

Katie W. Mahoney is the former vice president of health policy at the U.S. Chamber of Commerce.

Steven Lehotsky

Steve Lehotsky is a former executive vice president and chief litigation counsel for the U.S. Chamber Litigation Center, the litigation arm of the U.S. Chamber of Commerce.