Pay or Play Programs and ERISA Section 514: Proposals for Amending the Statutory Scheme

Abstract

ERISA section 514 preempts many state and local “pay or play” laws, which mandate employer contributions to their employees’ health insurance. Given the attention that health insurance received in the presidential election cycle, there is a reasonable likelihood of legislative action to achieve a national “pay or play” health care program in the coming years. But a national bill will leave gaps that states and localities may be able to fill – if they were not preempted by ERISA. Therefore, the negotiation of a national health insurance program should address ERISA preemption in order to enable state experimentation. The Article proposes and evaluates a number of options to amend section 514, ranging from targeted statutory changes to federal agency discretion to “de-preempt” state and local pay or play laws.