Saving the Savings Clause: Advocating a Broader Reading of the Miller Test to Enable States to Protect ERISA Health Plan Members by Regulating Insurance

Abstract:     
ERISA’s broad preemption of state laws relating to employee benefit plans, with regard to health plans in particular, prevents states from regulating these plans even though ERISA itself provides almost no substantive regulation of their provisions. This has permitted insurance companies to largely control the terms of ERISA health benefit plans that provide coverage through the purchase of insurance.

While this nation’s newly enacted health care reform places some limits on insurers’ coverage practices, it largely addresses the problem of the uninsured by mandating the purchase of insurance coverage. Therefore, the importance of enabling states to regulate insurers’ conduct has actually been magnified under health care reform.

While ERISA clearly precludes states from regulating self-insured health benefit plans, its “savings clause” saves from preemption states’ regulation of insurance. Consequently, ERISA’s savings clause is currently the only means by which states can regulate the substantive terms of insured ERISA health plans. As these state insurance laws comprise the mainstay of protections available for ERISA health plan members, it is critical that the savings clause function as fully as possible to save state laws that regulate insurance.

In 2003 in Kentucky Association of Health Plans, Inc. v. Miller, the United State Supreme Court devised a new test to determine savings, relaxing the requirements to save a greater range of state insurance laws. However, due to the test’s rather confused language, federal courts have continued to deliver inconsistent rulings as to whether particular state laws are saved from preemption. The unfortunate result is that state laws that legitimately regulate the relationship between insurers and insureds continue to be wrongfully preempted, depriving countless ERISA plan members of the state law protections that should be available to them.

This Article argues for a broader reading of the Miller savings test, in keeping with the intent and expansive language of ERISA’s savings clause. Applying Miller to give full effect to the savings clause will unbind the states to indirectly regulate insured ERISA health benefit plans via their traditional role of regulating insurance business conducted within the states’ borders.

Number of Pages in PDF File: 38

Keywords: ERISA, insurance

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