UPDATE: If you haven’t heard already, Amendment 56, along with 53, 55, and 57 will NOT be on the ballot this November. Well, they will still be in your bluebook, and your mail-in ballot, but they won’t be counted.
When I saw the new amendment (Amendment 56) that will be on this November’s ballot, requiring employers with 20 or more employees to have health insurance, I immediately thought of two things: the Massachusetts health insurance mandate and ERISA (the federal law that regulates employee health plans, and which preempts state laws).
Wouldn’t ERISA preempt Amendment 56? It would seem that it should.
Are there any other states that have state mandated employee health insurance? The answer is Yes, Hawaii and Massachusetts.
How is it that Hawaii and Massachusetts get to play by the rules the rest of us can’t?
I did some digging around and it turns out there very specific reasons why both of those states have not been over-ruled by the federal government.
Hawaii
Hawaii’s plan had the fortune of being implemented the same year as ERISA itself. Since Jan. 1, 1975, Hawaii’s law has required nearly all employers to provide health insurance to their employees who worked 20 hours or more a week for four consecutive weeks. Employees must maintain the minimum of at least 20 hours a week to remain eligible.
Apparently, Standard Oil sued Hawaii in the same year, and won (ERISA did preempt!) but Hawaii
Congressional delegation stepped in and got an exemption from ERISA. And so Hawaii has remained as the only state with such a law.
Massachusetts
So, how did Massachusetts get away with it?
In 2006, Massachusetts (Mitt Romney) passed the law that requires nearly every resident of Massachusetts to obtain health insurance coverage. Through the law, Massachusetts provides subsidized health care for residents earning up to 100% of the Federal Poverty Level, and partially subsidized health care those earning up to 300% of the FPL, depending on an income-based sliding scale.
So why didn’t anybody in the business community sue? Where is the Standard Oil of today?
According to people who know a lot more than I do, the reason is because the burden of the law has been so minimal on the business community ($300 or so per employee per year, if the business decided to pay instead of playing), that no one bothered to sue.
If you look at the graphic on the right, you will see that of the almost half a million newly insured people in Massachusetts, more than a half are getting insured under the state subsidized plan. The rest are getting into their employer plans or buying an individual plan.
The cost to businesses has been about $5 million, which in in of itself is probably close to what Wal-Mart fighting the state of Maryland’s own state mandated coverage law (Wal-Mart won), hardly worth fighting for.
Massachusetts is in violation of ERISA, but no one is bothering to sue.
However, now that the state finds itself $400 million short subsidizing healthcare, it has asked the business community to pony up $100 million of it by making the law more strict. The law requires most employers to offer health coverage or to pay an annual penalty of $295 per worker. But a crucial compromise was struck to win the business community’s support when the law was being contemplated: companies would be in compliance even if a minority of their workers were covered. Employers with more than 10 workers had the option of paying at least 33 percent of workers’ premiums within their first 90 days of employment or having at least 25 percent of their workers covered by an employer plan.
Now Massachusetts wants to raise additional money in penalties by requiring employers to meet both requirements.
Of course, the business community is outraged, and is fighting back. And it wouldn’t take much to get them to fight back with ERISA.
Colorado
So, what will happen in Colorado if Amendment 56 passes? It’s hard to tell because it will be up to the legislature to spell out all the details of how it will be implemented. If, like in Massachusetts, the state decides to assume most of the financial liability for all the newly insured people, then perhaps also like in Massachusetts, the employers won’t sue. Though, I can’t see Colorado picking up the tab on this one – we have TABOR among other issues.
Amendment 56 in Colorado will die in the hands of ERISA as soon as it passes.
