Implications of ERISA for health benefits and the number of self-funded ERISA plans

This Issue Brief provides an overview of the issues relating to the Employee Retirement Income Security Act of 1974 (ERISA) and health benefit plans, the major case law relating to ERISA and health plans, and the implications of the preemption of state regulations for health plan sponsors and participants. It also presents the latest data on the number of health plan participants in self-funded ERISA plans. Finally, it presents a summary of current legislative proposals that would attempt to amend ERISA. Under the framework ERISA established for employee benefit plans, the regulation of employment-based health benefit plans has evolved into a two-tiered system in which both federal and state laws play important roles. The Supreme Court has interpreted ERISA's "savings" and "deemer" clauses to mean that insured plans are subject to regulations directly at the federal level and indirectly at the state level, while self-funded plans are regulated exclusively at the federal level. The ERISA statute and the courts' interpretations of the Act have created a sharp controversy over how employee health benefit plans are provided and administered, with state regulators and consumer advocates on one side of the debate and plan sponsors (e.g., employers and unions) on the other. State regulators and consumer advocates tend to favor more regulation, and in many instances greater regulation at the state level, which they argue would provide more protections for consumers. However, employers and unions (or any plan sponsors) think ERISA preemption is very important to their ability to provide innovative and cost-effective health benefits for their employees, and assert that ERISA's present structure should be preserved. The U.S. General Accounting Office (GAO) found that 44 million individuals (39 percent of those in ERISA plans) were enrolled in self-funded ERISA plans in 1993, up from 39 million (33 percent of those in ERISA plans) in 1989. The Employee Benefit Research Institute (EBRI), using the same methodology as GAO with 1995 data, estimated that 48 million individuals (39 percent of those in ERISA plans) were enrolled in self-funded ERISA plans in 1995. When policymakers look to amend ERISA, they should consider whether the change to ERISA will produce a higher level of quality for consumers than is being provided under the present system and will continue to do so in the future. Policymakers must also decide whether quality of care is better enhanced by health plans' greater exposure to liability or by market forces. If policymakers decide that increased exposure to liability is the route to go, will consumers be able to enjoy any potential improvement in quality or will more individuals end up uninsured because of increased costs and not be able to get any care regardless of the quality?     

Clinical reengineering. A benchmark strategy

The health care provider marketplace continues to undergo dramatic changes with the advent of hospital mergers, acquisitions, and physician and hospital alliances. In this era of managed care, cost containment is still vital to a hospital's success, but many stakeholders--patients, employers, and physicians--are determined that quality of care also remain paramount. How can hospitals reduce their expenses and maintain a quality focus? The answer lies in a successful clinical reengineering initiative. One progressive model of clinical reengineering is presented, as well as examples of initiatives at three health care institutions. Initial results of clinical redesign programs have been dramatic and encouraging, with documented evidence of simultaneous cost savings and improved patient care.     

Maternal employment in Scandinavia: a comparison of the after-birth employment activity of Norwegian and Swedish women

A striking characteristic of recent Western labour market trends is the rise in employment among mothers of very young children. So far, few studies have analysed the impact of public policies on employment rates of young mothers. In this study we address this issue by comparing two similar countries, Norway and Sweden, which have the same set of policies with slight variations, using data sets with similar designs. We analyse rates of re-entry into paid work after first birth for mothers in 1968–88 by means of hazard regression. One important finding is that the right to paid maternity leave with jobsecurity greatly speeds up the return to work.We want to thank Jan Kowalski for programming assistence and the Swedish Research Council for the Social Sciences and the Swedish Council for Research in the Humanities and Social Sciences for financial support for the Swedish study. We are grateful to John F. Ermisch, Siv Gustafsson, to two anonymous referees and to colleagues at the Demography Unit for valuable comments. Responsible editors. Siv S. Gustafsson, John F. Ermisch.     

Batch sampling to improve power in a community trial. Experience from the Pawtucket Heart Health Program

Experiments involving large social units, such as schools, work sites, or whole cities, are commonly limited in statistical power because the number of randomized units is small, leaving few degrees of freedom for residual (between-unit) error. The authors describe a method for increasing residual degrees of freedom in a community experiment without substantially increasing cost or difficulty. In brief, they propose that the experimental units should be divided into random subsamples (batches). Batch sampling can improve statistical power if the community endpoint means are stable over time or if their temporal variation is comparable in period to the batch-sampling schedule. The authors demonstrate the theoretical advantages of the batch system and illustrate its use with data from the Pawtucket Heart Health Program, in which such a design was implemented.     

Implementation and process evaluation of a student "school-as-community" group. A component of a school-based drug abuse prevention program

Little documentation exists regarding the functioning of formalized adolescent groups as drug abuse prevention agents. Two studies are described that were conducted at high schools whose students are at high risk for drug abuse. Twenty-one schools were randomly assigned to one of three conditions: (a) standard care, (b) classroom drug abuse education only, or (c) classroom plus school-as-community. Results of the first study indicated that the school-as-community component--which involved weekly meetings and periodic events at seven schools--was implemented as planned, drug abused focused, and perceived as productive in discouraging drug abuse. In the second study, staff in the classroom plus school-as-community condition self-reported involvement in the greatest number of community activities across the school year, compared with staff from the other two conditions. These two studies support the feasibility of formalized groups of high-risk youth to promote drug-free events.     

Nevada gaming: revenues and taxes (1945-95)

In 1931, Nevada legalized casino gambling, an act which allowed its gaming industry to develop. Because many jurisdictions outside Nevada are now embracing legalized gambling as a path to a brighter economic future and because this proliferation presents Nevada with new challenges and opportunities, it is a good time to review the Nevada experience. Here, the focus is on gaming revenues and gaming tax collections during the 1945–95 period. We find that the growth rate of Nevada's gaming industry has slowed over time, with the relative importance of gaming in the Nevada economy peaking in the late 1970's. The Nevada economy has since been gradually diversifying, something which will increasingly pressure Nevadans to look for government revenue sources other than gaming if current levels of government services are to be maintained.     

"How much do you spend gambling?" ambiguities in survey questionnaire items

The validity of a survey's findings is dependent upon the clarity and lack of ambiguity contained in each individual item yet minimal attention has been directed to this issue in most prevalence studies. Researchers have shown a tendency to accept the uncritical assumption that respondents interpret seemingly simple and straightforward items such as 'how much do you spend gambling?' in a consistent manner. No attempt is made to confirm the uniformity of responses by clarifying the mathematical formulae used by respondents to derive their answers. The purpose of this paper was to examine the consistency shown by a sample of 181 medical undergraduate subjects in estimating the level of gambling expenditure in a series of five case vignettes describing various scenarios of wins and losses during a session of gambling. Results revealed a wide variation in calculated figures depending upon whether or not subjects interpreted the item to mean net expenditure or turnover. Only two thirds or less of subjects calculated the figure to be the difference between the initial amount risked and the residual at the conclusion of the session. It is suggested that more attention be paid in prevalence and clinical studies to providing subjects with clear instructions on how to calculate expenditure estimates.