May 22, 2007
For additional information:
Deanna Johnson, APR, or Jason Hammersla

Council testifies before House subcommittee

Ability to offer uniform health benefits essential for multi-state employers

WASHINGTON, D.C. — "Employers are on the front line of addressing the rising cost of health care through the development of innovative plan designs, implementing wellness programs and promoting transparency in the costs and quality of health care services. It is critical that Congress not do anything with respect to ERISA preemption that would stifle this innovation," said Honeywell Vice-President and Deputy General Counsel for Human Resources Kevin Covert, testifying on behalf of the American Benefits Council before the House Education and Labor Subcommittee on Health, Employment, Labor and Pensions.

The subcommittee hearing on "Health Care Reform: Recommendations to Improve Coordination of Federal and State Initiatives" set out to examine the role of individual state health reform proposals (such as Maryland's "Fair Share" law, which a federal court recently ruled was preempted by ERISA, and the comprehensive health reform proposal adopted in Massachusetts) in reducing the number of uninsured individuals. Many other states — as well as some cities and counties — are now actively considering similar health reform initiatives.

"Simply put, ERISA preemption is vital to the voluntary sponsorship of health plans. Employers depend on ERISA preemption to ensure that coverage can be offered uniformly across the country while attempting to keep costs as low as possible for workers," Covert said.

"Employers have an enormous stake in addressing the problem of the uninsured and the rising cost of health care. Employers are directly affected by the costs of uncompensated care for the uninsured, which drives up costs for all health plan sponsors as well as government programs," Covert said.

"A number of the elements of state reform are laudable, including expanding subsidies to purchase private insurance, helping consumers make better health care decisions, using reliable information to compare health care costs and quality and giving states more flexibility over their use of federal funds to meet their health care needs," Covert said. "But employers are very concerned about proposals that subject them to a patchwork of state-by-state regulation. Even modest variations in requirements will impose significant costs and burdens."

The Council urged the subcommittee to avoid ERISA waivers for state initiatives, noting that this would create disparities between competing companies and within a single company's workforce. And without ERISA preemption, employers could be encouraged to locate in states with less burdensome health care mandates.

Covert's testimony is available on the Council Web site. To arrange an interview with Paul Dennett, Council vice president, health policy, please contact Deanna Johnson, APR, Council director, communications, at, or Jason Hammersla, Council manager, communications & publications, at Both can be reached by phone at (202) 289-6700.

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The American Benefits Council is the national trade association for companies concerned about federal legislation and regulations affecting all aspects of the employee benefits system. The Council's members represent the entire spectrum of the private employee benefits community and either sponsor directly or administer retirement and health plans covering more than 100 million Americans.