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?     

Sustainability of family planning and health projects

USAID has assisted the Ghanian Ministry of Health since 1991 to boost family planning services under the Ghana Family Planning and Health Project by providing supplies and information and increasing the effectiveness of HIV/AIDS prevention and control. The sustainability of the health system is endangered by favoring capital expenditures in lieu of continuous expenditures; the lack of linkage between project activities and regular activities; the centralization of resource flow; and too ambitious targeting. Capital outlays provided by USAID featured in the construction of four public health laboratories, but their operation also requires continuous financing amounting to about 10% of the whole investment. The latter is the responsibility of the government, although the details of these recurrent costs were not detailed at the outset and providing these funds for continuous operation may impair the operation of other systems. The resource constraints could be alleviated by an effective cost-recovery system or by the general improvement of the economy. The lack of linkage between project and regular activities is serious at regional and district levels. The centralization of resource flow means that most resources are kept for headquarter level activities, thus other activities suffer and the health sector becomes excessively reliant on donor support. Too ambitious planning stems from pressure on donors and hastily implemented projects result in duplication and waste. Closer consultation with the parties involved would improve the situation. The rivalry of technical and policy groups has contributed to past deficiencies. Double funding for the same activity has also occurred further increasing the dependence on donor funding. By concentration on people and systems sustainability would be enhanced, while cost recovery would help the operation of the laboratories. The Health Education Unit (HEU) recognized the importance of IEC and obtained financing for such activities.     

Bequests as a heir "disciple device."

This paper develops a model ofinter vivos gifts and bequests in a setting of moral hazard and adverse selection. Altruistic parents do not perfectly know how much effort their children make to earn their living, nor do they know their true level of ability.Inter vivos gifts take place prior to the realization of the children's earnings whereas at the moment of bequests, parents do observe them. We show that an optimal transfer policy generally uses a mix ofinter vivos gifts — deemed as more efficient — and bequests — deemed as more redistributive.We are thankful to Allessandro Cigno, Jacques Cremer, Claude d Aspremont and anonymous referees for their comments.Responsible editor: Alessandro Cigno     

The health status of elderly people and the new direction of health services

The projected increase of people in Japan aged 75 years and older in the years to come implies the increase of the disabled elderly. Thus, the core of societal preparation for the aging of the population is generally considered to be the expansion of services for the disabled elderly. However, gerontological studies on the health status of the elderly conducted in Japan show that the prevalence of disability is quite low and even decreasing. Relative to the services for the disabled elderly, preventive services for the healthy elderly have long been overlooked. In 1994, the Metropolitan Tokyo Government organized a task force to develop a new health education program as the preventive health service for the healthy urban elderly. A preliminary plan outlining the health education program--consisting of propagation with a booklet, on-the-job training of practitioners, and development of new curricula and teaching materials--was proposed by the authors for discussion within the task force. Although the inquiry has just begun and the plan is still nascent, it seems adequate to fit the needs for preventive health services in the near future.     

Health care futures. Part 2: The future of physician executives? Panel discussion

What is the future of health care in America? This is Part 2 of The Physician Executive panel discussion that explores the future of health care in America. To narrow this ambitious focus somewhat, the future is defined as five to 10 years hence. In Part 1, which was published in the May/June issue, Russell C. Coile, Jr., Barbara LeTourneau, MD, MBA, FACPE, James Reinertsen, MD, Uwe Reinhardt, PhD, Marshall Ruffin, MD, MPH, MBA, FACPE, and David Vogel, MS, shared their opinions about what the future holds in managed care, information technology, and biotechnology. In Part 2, Susan Cejka, Barbara LeTourneau, MD, MBA, FACPE, John Henry Pfifferling, PhD, Uwe Reinhardt, PhD, and James Todd, MD, share their views on the future of medical education and physician executives.     

Population statistics] as of July 1, 1997

In thousands, Thailand's total population as of July 1, 1997, was 60,440, of which 30,202 were male and 30,238 were female. 19,087 live in urban areas and 41,353 live in rural areas. 12,141 live in the northern region, 19,678 to the northeast, 7566 in the South, 13,112 centrally, and 7943 in the Bangkok metropolis. 16,288 were under age 15, 39,073 aged 15-59, and 5079 aged 60 and over. There were 15,558 women of reproductive ages 15-44. Crude birth and death rates per 1000 population were 15.6 and 5.0, respectively, with an overall natural growth rate of 1.1%. Infant mortality was 25.0 per 1000 live births. Male and female life expectancies at birth were 66.6 and 71.7 years, respectively. Further life expectancies at age 60 for males and females were 18.8 and 22.0 years, respectively. The rate of total fertility per woman was 1.98 with a contraceptive prevalence rate of 72.2% and an anticipated population of 70,642 in the year 2012.     

Making borders stick: population transfer and resettlement in the Trans-Curzon territories, 1944-1949

"Designed in 1919-20 by the British mediator Lord Curzon as an armistice proposal between the then warring powers Poland and Soviet Russia, the Curzon Line served to identify the maximum territorial reach of Soviet political influence in Europe....[The author discusses] a program of resettlement which would target communities on both sides of the new border, a policy eventually affecting some 1.4 million individuals...." The implementation and impact of this population exchange are described.     

Comparing measures of poverty and relative deprivation: an example for Belgium

This paper presents three different poverty standards. A first approach takes the disposable income as an indicator of poverty. A second approach uses the Leyden approach. Finally an aggregate index of deprivation, based on the observation of consumption events, is constructed through a particular econometric procedure proposed by Desai and Shah (1988). These alternative measures are then compared on a sample composed of 6380 Belgian households. Such an analysis can be expected to provide some further insight into the problem of measuring poverty, which has been the subject of a recent controversial debate.We thank the participants of the Second Annual Meeting of the European Society for Population Economics, June 23–25, 1988, Mannheim (FRG), L. Gevers, J. Lindsey, P. Pestieau, B. Sak, K. Van den Bosch and two anonymous referees for their comments and suggestions.     

Chinese Communist Party Central Committee calls on Party and Youth League members to take the lead in having only one child (per couple), [open letter,September 25, 1980

This open letter from the Central Committee of the Chinese Communist Party concerns the question of controlling China's population growth. To limit the total population of China to 1.2 billion by the end of this century, the State Council has advocated 1 couple giving birth to only 1 child. China's total population will reach 1.3 billion after 20 years and will exceed 1.5 billion after 40 years. Besides the family needing to increase the cost of upbringing, increasing population also requires the state, in order to solve their education, employment, and otheer problem, to raise education expenditures, investments of equipment, and outlays for social and public utilities. The phenomenon of population "aging" will not occur within this century because at present 1/2 of the total national population is below the age of 21, while elderly people above age 65 consist of less than 5%. After 40 years of the practice of 1 child per couple, some families may experience the problem where the elderly lack people to care for them. In the future when production is developed and the people's lives are improved, social welfare and social security will certainly increase and improve continuously. To control population growth, the Party and government have already adopted a series of concrete policies; considerations and allowances are to be given to single children and their families with respect to admission to childcare centers and primar schools. Young comrades must begin with themselves, while old comrades must educate and supervise their own sons and daughters.