ERISA: The Framework that Stabilizes Employer-Sponsored Insurance

For nearly 50 years, the Employee Retirement Income Security Act (ERISA) has provided the framework needed to provide a stable employer-sponsored insurance (ESI) system. As the single largest source of health benefits in the United States, ESI provides health coverage for nearly 160 million American workers and their families. ERISA underpins the success of the system, playing an important role to keep employer-sponsored health coverage accessible and affordable. 

Employers support ERISA because it allows them to offer and maintain uniform health plans while also giving participants access to the same or a similar set of benefits. Under ERISA, self-insured employers are able to provide health coverage under a uniform system of operating rules and regulations. Through ERISA’s preemption clause, self-insured employers – and those they cover – are protected against inconsistencies in state laws. Due to a consistent set of standards, self-insured employers can provide high-quality health coverage to American workers and their families.  

For example, if an employer is headquartered in Atlanta, but it has employees located in 50 states, ERISA and the preemption protection afforded self-insured plans allows the employer to administer the same plan or plans for all its workforce.  ERISA’s preemption of state laws ensures that the self-insured benefits offered can be the same for all employees and reduces the burden and costs associated with having to comply with complicated patchwork of various state laws. 

Without this preemption of state laws, self-insured employers would be subjected to onerous administration and regulatory requirements that would be difficult for any size employer to navigate. Employees would also face higher costs, reduced access to care, and greater complexity in their coverage. By streamlining these operating rules, the preemption clause has afforded employers the ability to offer more efficient and affordable health coverage without the risk of violating various, and potentially conflicting, state laws. 

ERISA’s framework also gives employers the flexibility to determine the coverage that best meets the needs of their employees, ensuring their participants have access to robust and innovative health care solutions. Any change to ERISA’s preemption clause risks the imposition of additional benefit requirements and costs on employers and ultimately employees. This could erode the successful ESI system, drive up health costs for American workers, and limit access to treatments, therapeutics, and cures. 

ERISA works for ESI. This foundation is critical to keeping our health care system efficient and cost-effective for tens of millions of American workers. For nearly five decades, ERISA has successfully strengthened the ESI system and contributed to the growing number of Americans covered by ESI plans. It’s critical that ERISA’s provisions are protected and maintained for the business community going forward. By doing so, we can preserve employers’ ability to offer affordable, high-quality, and convenient health care plans to their employees for years to come.