What You May Hear

1. “It cannot be implemented because the Employee Retirement Income Security Act of 1974 (ERISA) prohibits states from interfering with private insurance.”

2. “It cannot be implemented because federal laws involving Medicare and Medicaid prevent states from taking the initiative to finance health care for all their citizens.”

Here are the responses:

1. ERISA has indeed been a problem for incremental band-aid health care reforms that continue to depend on employer-based insurance and use pay-or-play funding mechanisms because ERISA forbids states from making laws that “relate to” employer insurance.

A single payer plan will:

  • Provide publicly-financed, government funded health coverage care for everyone.
  • Be funded by broad-based taxes.
  • Put no health insurance related mandates on employers, who would be free from state government imposed insurance obligations. All they would have to do is pay their taxes like everyone else.

Thus there is no ERISA impediment to a state single payer system.
For more information on ERISA you can download the document: Including Employer Financing in State Health Reform Initiatives from The Academy of Health, listed under their July 2008 reports.

2. Medicare and Medicaid programs represent a significant portion of health care funding for Vermonters. Under existing federal law, Medicare providers would continue to bill Medicare, even after enactment of a state single payer. In addition, the state would pay those costs not covered by Medicare, just as Medicare supplemental and Medicare Part D insurance do now.

In the case of Medicaid, waivers would be sought to allow the state to put federal funds directly into its single payer system. If such a waiver was denied, the state could still continue to operate Medicaid in the traditional manner, paying the Medicaid matching funds and paying directly for services not covered under the Medicaid program.

Certainly, it would be more efficient to fully integrate these funding sources into the single payer system, but the new program could move forward whether or not the federal government grants special accommodations.