The Fogarty Healthcare Plan Would be Blocked by the Courts

Should Lieutenant Governor Charles Fogarty have the opportunity to implement his universal healthcare proposal, he will find himself disappointed. A key section of his Hope Healthcare Plan would be disallowed by the courts, if challenged under Federal law.

The section that would not pass Federal muster is from Phase 2 of the Fogarty plan…

Employers will be required to provide health insurance coverage for their employees or pay a “fair share” fee. Employers with 10 or more employees will be required to pay an appropriate amount of money every year for each full-time-equivalent employee who is not covered through the employer or through another insurer. With the small business subsidy in place, providing insurance should not be an undue burden. Businesses that do the right thing and provide health insurance should not be placed at a competitive disadvantage with those that choose not to help insure their employees. These assessments will be collected in a state fund to support health insurance for uninsured Rhode Islanders who cannot afford coverage.

A similarly structured plan, mandated by the government of Maryland, was struck down by a Federal District Court earlier this year (Retail Industry Leaders Association v. Felder [2006]). The District Court upheld the long-standing precedent that the Employee Retirement Income Security Act of 1974 (ERISA) prohibits states from regulating employee benefits any more stringently than the Federal government does. Ergo, a state government cannot require a company to provide health insurance to its employees because the Federal government does not require them to do so.

I’m not saying (for the purposes of this post) that this is a good thing or a bad thing, just that the courts have been consistent in interpreting the ERISA statute in this way.

ERISA is not a new law. It is disappointing that candidate for governor, especially one who is running TV commercials for universal healthcare, is completely unaware of ERISA's effects and limitations. That Lieutenant Governor Fogarty and his advisors and policy wonks are ignorant of the ERISA constraints on health insurance shows how closed-minded they are to the reality that part of America’s healthcare crisis has its origins in out-of-control regulation.