Creating a Paternalistic Market for Legal Rules Affecting the Benefit Promise

Abstract:     
Notwithstanding the fact that ERISA was enacted to protect employee benefits, courts have narrowly construed the relief available when benefits are denied, out of concern that a stronger remedy would be too costly for the system to bear. Judges, I argue, are ill-equipped to make this policy judgment. Instead, a regulated, subsidized, paternalistic market should be created to permit the benefit players themselves to choose and price the strength of the remedy they desire. This is a superior means to reach the right level of remedial strength for the most players. To protect against undesirably weak remedial options being selected, I propose the market should have a highly protective default remedial option, clear disclosure rules, subsidies, and a regulatory floor.

Number of Pages in PDF File: 36

Keywords: ERISA, pensions, health care, benefits

Accepted Paper Series