HealthLeaders-InterStudy, the leading provider of managed care market intelligence, reports that a recent federal court decision involving a Suffolk County, N.Y., law could prompt re- examination of "pay-or-play" laws in other states, which require employers to spend a minimal amount on healthcare, or pay an assessment to the state. According to the latest TriState Health Plan Analysis, a U.S. District Court Judge struck down a Suffolk County ordinance requiring large employers, such as Wal-Mart, to make a minimum healthcare expenditure on their employees. The ordinance targets retailers whose employees may rely on Medicaid programs because they do not receive adequate health insurance coverage from employers.
The ruling was similar to that involving a Maryland law targeting Wal- Mart. Both claimed that the statutes were pre-empted by the federal Employee Retirement Income Security Act, or ERISA, according to the TriState report.
"Massachusetts, Vermont and San Francisco all have laws requiring employers to spend a minimal amount on healthcare, or pay an assessment to the state," states Chris Lewis, market analyst for HealthLeaders-InterStudy, and author of the report. In addition, Pennsylvania and California have proposed an employer mandate for their states."
States and cities that use a broad approach to "pay-or-play" policy stand a greater chance of surviving legal challenges than those that target one segment of the business community.
"Another crucial element is that mandates have a minimal effect on employers so they won't be compelled to change their nationally structured ERISA-covered health plans," Lewis continued. "For instance, Massachusetts' $295 yearly assessment on employers who don't offer a prescribed level of benefits is not so large as to offer only one practical option."
The TriState report details the recent court decision, which sided with the Retail Industry Leaders Association, as well as employer healthcare mandates in other states. The Suffolk County Fair Share For Healthcare Act was signed into law in 2005 and was challenged in court a year later. The ordinance affected retail stores in the Long Island area with annual revenues of $1 billion or more and with grocery sales making up 20 percent of revenue.
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