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Federalism, ERISA, and State Single‐Payer Health Care

While federal health reform sputters, states have begun to pursue their own transformative strategies for achieving universal coverage, the most ambitious of which are state‐based single‐payer plans. Since the passage of the Affordable Care Act in 2010, legislators in twenty‐one states have proposed sixty‐six unique bills to establish single‐payer health care systems. This paper systematically surveys those state legislative efforts and exposes the federalism trap that threatens to derail them: ERISA’s preemption of state regulation relating to employer‐sponsored health insurance. ERISA’s expansive preemption provision creates a narrow, risky path for state regulation to capture the employer health care expenditures crucial for financing a single‐payer system. While this paper illustrates how state proposals may survive ERISA, the threat of preemption drives states to structure their plans in convoluted ways that may undermine other systemic goals such as universality, solidarity, and streamlined administration.

This analysis demonstrates how ERISA’s uniquely broad preemption, coupled with its lack of waiver authority, elevates the interests of private employers above those of sovereign states and diminishes states’ abilities to serve as laboratories of health reform. We argue that this moment in health reform demands ERISA preemption reform. To restore balance to health care federalism and pave the way for state reforms of all kinds, this paper proposes federal legislative and jurisprudential solutions: amendments to ERISA’s preemption provisions, the addition of a statutory waiver, and/or a reinterpretation of ERISA preemption consistent with congressional intent and the presumption against preemption.