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ERISA Implications for Employer Pay or Play Coverage Laws

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Publication Date: March 2005

Publisher(s): California HealthCare Foundation

Author(s): Patricia A. Butler

Series: Issue Brief: Insurance Markets

Topic: Health (Health care financing)

Type: Brief

Coverage: California


Most insured Californians receive health coverage through the workplace, but 22 percent of the state's workers are uninsured, primarily because one-third of California firms do not offer health insurance. In 2003 the California legislature enacted SB 2, which would have required large and medium-sized employers to pay a fee to fund a public health coverage program or to cover their workers with specified health benefits. However this law was repealed by the voters in November 2004. To inform public discussion of future "pay or play" proposals, this issue brief discusses potential problems for these laws posed by ERISA, a federal employee benefits law that preempts certain types of state laws affecting employer-sponsored health benefits.