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When the 4th U.S. Circuit Court of Appeals shot down Maryland's "Fair Share" health-care law (aka. the "Wal-Mart Law") last week, a host of similar legislative efforts pending in numerous states also fell by the wayside. But if you think that's the end of state-by-state efforts to provide universal health coverage to the nation's 46 million uninsured, think again.

Massachusetts and Vermont have passed--and California has proposed--universal statewide coverage that, according to many experts, skirts the federal employee-benefits law known as ERISA, which ultimately undermined Maryland's effort.

"There's no national system in sight," said Ted Nussbaum, director of health-care consulting for North America at the Arlington, Va., office of consulting firm Watson Wyatt Worldwide. But, he noted, the "states, one at a time, are trying initiatives to raise revenues and cover the uninsured."

In Massachusetts, anyone without health insurance who files an income-tax return will face a tax. The state will also collect $295 per month per employee from organizations that do not provide coverage.

Vermont, which has similar legislation, will collect $395 per uninsured employee.

"This could be a nightmare for large employers who will have to comply in every state where there's legislation," said Nussbaum.

Companies need to look at how their health-care coverage data is structured, he said, "so if you need to report data, you can."

While certain newspaper editorials and observers claim the efforts in Massachusetts and California won't survive the ERISA test in court, some industry experts disagree.

"In Massachusetts, the state has the authority," said Laura Tobler, health-policy analyst for the Denver-based National Conference of State Legislatures, a nonprofit advisory group. "States have no authority to regulate employee benefits. But states have the right to tax--and Massachusetts will tax employers who don't cover employees."

Tobler said California Gov. Arnold Schwarzenegger's proposal is "one to watch" as it works its way through the state legislature.

Taking a contrarian stand is J.D. Piro, an attorney and a principal at Hewitt Associates in the firm's Norwalk, Conn., office.

"Maryland has implications for California and Massachusetts," he said.

According to Piro, the legal analysis doesn't differ whether the proposal calls for a threshold of 10 employees (California) or 10,000 (Maryland).

"States cannot establish or mandate a plan," he said, "so Massachusetts and California had better be careful because states must look at whether (their proposals) will pass muster with ERISA."

Nevertheless, Piro recommended getting on top of reporting requirements soon. Companies that employ Massachusetts residents, he said, should "cull out (the) Massachusetts residents and be prepared to report."

March 1, 2007

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