1 See Michael S., Dukakis, The States and Health Care Reform, 327 New Eng. J. Med. 1090 (1992);Google Scholar Daniel S., Greenberg, State Action on Health Care Reform, 339 Lancet 1101 (1992).Google Scholar But see Deborah A., Stone, Why the States Can't Solve the Health Care Crisis, Am. Prospect, Spring 1992, at 51, 51.Google Scholar

2 State initiatives are reviewed in General Accounting Office, Access to Health Care: States Respond to Growing Crisis (1992) [hereinafter GAO Report].

3 Many states have long had some form of hospital price controls. See, e.g., Conn. Gen. Stat. Ann. § 19a-151 (West Supp. 1993); ME. Rev. Stat. Ann. tit. 22, § 396 (West 1992 & Supp. 1992- 1993); Md. Health-Gen. Code Ann. §§ 19-201 to 19-222 (Michie 1990 & Supp. 1992); N.J. Stat. Ann. § 26:2H-4.1 (West 1987 & Supp. 1992-1993); N.Y. Pub. Health Law § 2807 (McKinney Supp. 1993).

4 Washington, for example, contracts with a private insurer to offer subsidized health insurance to the working poor. See Wash. Rev. Code Ann. § 70.47.010-.901 (West Supp. 1992). Minnesota has enacted legislation that would tax health care providers in order to provide affordable insurance to the uninsured. Minn. Stat. Ann. § 295.52 (West Supp. 1993).

5 See, e.g., 1992 Fla. Sess. Law Serv. ch. 92-33 (West). The statute created the Florida Health Plan, but left the full development of the plan and its implementation to a newly created agency entrusted with reporting recommendations to the legislature. See id., which recently enacted a reform package that embraces many of the concepts of managed competition. Larry, Rohter, Florida Blazes Trail to a New Health-Care System, N.Y. Times, Apr. 4, 1993,Google Scholar § 1, at 1. For a discussion of managed care, see also infra notes 26-28 and accompanying text. See also 1992 Vt. Laws 160 (establishing a health authority to develop a comprehensive reform plan by 1994).

6 GAO Report, supra note 2, at 17-18.

7 Stone, supra note 1, at 59.

8 Id.

9 See New State Ice Co. v. Liebmann, 285 U.S. 262, 311 (1932) (Brandeis, J., dissenting).

10 Michael S., Morgenstern, The Role of the Federal Government in Protecting Citizens from Communicable Diseases, 47 U. Cinn. L. Rev. 537, 541 (1978).Google Scholar

11 See Wendy E., Parmet, Legal Rights and Communicable Disease: AIDS, The Police Power and Individual Liberty, 14 J. Health Pol., Pol'y & L., 741, 744-45 (1989).Google Scholar

12 Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1, 203 (1824).

13 See Parmet, supra note 11, at 743-45.

14 Gibbons, 22 U.S. at 210.

15 Id. at 227 (Johnson, J., concurring).

16 The doctrine and its various formulations over time are surveyed in Laurence H. Tribe, American Constitutional Law 401-545 (2d ed. 1988).

17 See Mayor of N.Y. v. Miln, 36 U.S. (11 Pet.) 102, 128 (1837); Willson v. Black Bird Creek Marsh Co., 27 U.S. (2 Pet.) 245, 251 (1829); Parmet, supra note 11, at 744.

18 See, e.g., Minnesota v. Barber, 136 U.S. 313, 322-23 (1890).

19 In recent years, the Fourteenth Amendment, rather than the Commerce Clause, has been the primary vehicle for challenges to state health care policies. See Wendy E., Mariner, Access to Health Care and Equal Protection of the Law: The Need for a New Heightened Scrutiny, 12 Am. J.L. & Med. 345, 347 (1986).Google Scholar This is partially due, no doubt, to the McCarran-Ferguson Act. See infra notes 37-43 and accompanying text. It is also due to the fact that health care policies today are as likely to be regarded as infringing on individual rights as on free trade.

20 See Maher v., Roe, 432 U.S. 464, 478-79 (1977); Mariner, supra note 19, at 358-59.Google Scholar

21 Mariner, supra note 19, at 348. However, even if benefits laws restrict protected rights, they may be upheld. See Rust v. Sullivan, 111 S. Ct. 1759 (1991) (federal government may restrict speech in federally funded family planning clinics).

22 Maker, 432 U.S. at 469. For a critical evaluation of the Court's interpretation of the Equal Protection Clause and its effects on access to health care, see Mariner, supra note 19, at 347-61.

23 Thus, the Court maintains that the U.S. Constitution mandates only negative rights. See Judith O., Brown et al., The Failure of Gender Equality: An Essay in Constitutional Dissonance, 36 Buff. L. Rev. 573, 618-25 (1987).Google Scholar

24 Maher, 432 U.S. at 474. For criticism of this doctrine, see Wendy E., Parmet & Mary E., O'Connell, Rehnquist's Road to Serfdom: The Ominous Message of Rust v., Sullivan, Am. Prospect, Spring 1992, at 94, 96–98.Google Scholar

25 See Thomas L., Greaney, Competitive Reform in Health Care: The Vulnerable Revolution, 5 Yale J. on Reg. 179, 181-82 (1988).Google Scholar

26 Paul, Starr, Healthy Compromise: Universal Coverage and Managed Competition Under a Cap, Am. Prospect, Winter 1993, at 44, 46;Google Scholar Elizabeth, Neuffer, Freeze in Health Costs Is Focus of Hot Debate, Boston Globe, Mar. 21, 1993, at 1, 14.Google Scholar

27 See Alain C., Enthoven, The History and Principles of Managed Competition, Health Aff., Supp. 1993, at 24;Google Scholar Robin, Toner, Hillary Clinton's Potent Brain Trust on Health Reform, N.Y. Times, Feb. 28, 1993,Google Scholar § 3, at 1. For a prime example of a managed competition plan, see Alain, Enthoven & Richard, Kronick, A Consumer-Choice Health Plan for the 1990s: Universal Health Insurance in a System Designed lo Promote Quality and Economy, 320 New Eng. J. Med. 29, 94 (1989).Google Scholar Paul Starr, however, emphasizes that managed competition is not a pure market approach, since it relies on significant regulation to enable “consumers to make informed, cost-conscious choices among alternative health plans with population-based budgets.” Starr, supra note 26, at 46.

28 See Greaney, supra note 25, at 180-84.

29 See infra notes 31-40, 51 and accompanying text.

30 See infra notes 53-68 and accompanying text.

31 See, e.g., Baldwin v. GAF Seelig, Inc., 294 U.S. 511, 522 (1935).

32 See H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 531-32 (1949).

33 This is not to say that most state health regulations are prohibited by the doctrine. Those regulations that are facially neutral with respect to out-of-state interests and do not significantly burden such interests are likely to be upheld. See infra notes 35 and 50 and accompanying text.

34 See, e.g., Wyoming v. Oklahoma, 112 S. Ct. 789, 800 (1992); Chemical Waste Management, Inc. v. Hunt, 112 S. Ct. 2009, 2013-14 (1992).

35 E.g., Kassel v. Consolidated Freightways Corp., 450 U.S. 662 (1981).

36 Of course, such reforms are possible. A state might choose to fund a high-risk pool by taxing only out-of-state health care companies. A state might also mandate certain coverage only by multistate employers. Such laws would almost certainly be found unconstitutional.

37 A single-payer plan would establish the state government as the sole financier of health insurance within a state. See Peter J., Howe, Bucking the State Trend, Group Says Its Time for Sweeping Health Plan, Boston Globe, Mar. 28, 1991, at 60.Google Scholar

38 Such a plan however, should be saved by the McCarran-Ferguson Act. See infra notes 41- 50 and accompanying text.

39 Cf Kassel, 450 U.S. 662 (Iowa law barring the use of trucks longer than 60 feet on Iowa's interstate highways would substantially burden interstate commerce because trucking companies would have to route these longer trailers around Iowa, detach them, or separate double-trailers). The envisaged law would undoubtedly be challenged under the Employee Retirement Income Security Act (“ERISA“). See infra notes 88-167 and accompanying text. However, it might be rescued by ERISA's savings clause if the state applied the law only to the packages offered by insurance companies, as opposed to the benefits offered by employers. See infra notes 96-115 and accompanying text.

40 The actual determination depends a great deal on the specific facts of the case and the extent to which the court believes that the state is discriminating against out-of-state interests. See, e.g., Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981) (upholding state law banning sale of milk in nonreturnable plastic containers despite disparate effect on out-of-state suppliers).

41 15 U.S.C.A. §§ 1011-1015 (West 1976).

42 McCarran-Ferguson Act, Pub. L. No. 79-15, 59 Stat. 33 (1945) (codified as amended at 15 U.S.C.A. §§ 1011-1015 (West 1976)). See also Group Life & Health Ins. Co. v. Royal Drug Co., 440 U.S. 205, 217-18 (1979) (“The primary concern of Congress … was in enacting legislation that would ensure that the States would continue to have the ability to tax and regulate the business of insurance.“).

43 15 U.S.C.A. § 1011 (West 1976). The Act goes on to state that federal regulations, except those pertaining to antitrust, shall not be “construed to invalidate, impair, or supersede any law enacted by any State for the purpose of regulating the business of insurance … unless such Act specifically relates to the business of insurance.” Id. § 1012(b). This section was the model for, and works in conjunction with, ERISA's savings clause. 29 U.S.C.A. § 1144(b)(2)(A) (West 1985). See infra note 96 and accompanying text.

44 See, e.g., Group Life & Health Ins. Co., 440 U.S. at 219 n.18 (“The McCarran-Ferguson Act operates to assure that the States are free to regulate insurance companies without fear of Commerce Clause attack.“).

45 Union Labor Life Ins. Co. v. Pireno, 458 U.S. 119, 129 (1982) (emphasis added).

46 According to the General Accounting Office, as of late 1991, 25 states had legislated on or were operating high-risk pools to insure access to insurance for “medically uninsurable” individuals. See GAO Report, supra note 2, at 65.

47 E.g., Hall v. Pennwalt Group Comprehensive Medical Expense Benefits Plan, 746 F. Supp. 507 (E.D. Pa. 1988) (law mandating conversion option constitutes regulation of business of insurance under both McCarran-Ferguson Act and ERISA).

48 Single-payer plans, or any laws under which the state itself gets into the business of providing health insurance, may also be protected from Commerce Clause attack by the market participation doctrine. Hughes v. Alexandria Scrap Corp., 426 U.S. 794 (1976). Under this doctrine, the Supreme Court has exempted from the dormant Commerce Clause programs in which states themselves operate in the market. Id. at 809-10.

49 Sec v. National Sec, Inc., 393 U.S. 453, 460 (1969).

50 Travelers Ins. Co. v. Cuomo, 813 F. Supp. 996, 1007 (S.D.N.Y. 1993) (state law imposing surcharges on hospital fees paid by insurers is not “business of insurance” for purposes of ERISA's savings clause); Stuart Circle Hosp. Corp. v. Aetna Health Mgmt., 800 F. Supp. 328 (E.D. Va. 1992) (state law regulating Preferred Provider Organization (“PPO“) contracts is not “business of insurance” for purposes of ERISA's savings clause).

51 H.P. Hood & Sons, Inc. v. Du Mond, 336 U.S. 525, 531-32 (1949).

52 Mary Anne, Bobinski, Unhealthy Federalism: Barriers to Increasing Health Care Access for the Uninsured, 24 U.C. Davis L. Rev. 255, 271 (1990);Google Scholar Stone, supra note 1, at 59.

53 415 U.S. 250 (1974).

54 Id. at 269-70.

55 Id. at 259-60.

56 Id. at 261-62.

57 See supra notes 21-22 and accompanying text.

58 E.g., Sununu v. Stark, 420 U.S. 958 (1975), off g mem., 383 F. Supp. 1287 (D.N.H. 1974) (three-judge panel) (upholding seven-year durational requirement for state senator); Sosna v. Iowa, 419 U.S. 393 (1975) (upholding one-year requirement to bring a divorce against a nonresident).

59 Thus, whether health care is regarded as a necessity, as in Maricopa, or a mere gratuity, state limits on access by new residents may be troubling. If health care is a necessity, its denial can be seen as a penalty. If, on the other hand, it is merely another good, the state interest in ensuring the financial viability of a reform plan may not be seen as terribly weighty, and any limits imposed by such a plan may be regarded as violations of federal interests.

60 Paul v. Virginia, 75 U.S. (8 Wall.) 168, 180 (1869).

61 See, e.g., Supreme Court of N.H. v. Piper, 470 U.S. 274 (1985); United Bldg. & Constr. Trades Council v. Mayor of Camden, 465 U.S. 208 (1984).

62 Piper,470U.S. at 284.

63 See infra note 66.

64 410 U.S. 179 (1973).

65 Doe was the companion case to Roe v. Wade, 410 U.S. 113(1973). Doe involved a Georgia law that prohibited out-of-staters from obtaining an abortion. Doe, 410 U.S. at 200.

66 E.g., Aldering v. Ohio Sch. Athletic Ass'n, 779 F.2d 315 (6th Cir. 1985) (statute barring nonresident participation in interscholastic sports did not violate Privileges and Immunities Clause); Fenster v. Schneider, 636 F.2d 765 (D.C. Cir. 1980) (allowing reduced transportation subsidy for resident students traveling to public or private schools or educationally-related activities); Kuhn v. Vergiels, 558 F. Supp. 24 (D. Nev. 1982) (holding five-year residency requirement was not rationally related to state's objective); Rosenstock v. Board of Governors of Univ. of N.C., 423 F. Supp. 1321 (M.D.N.C. 1976) (discussing state university's program of preferential admissions for in-state applicants); cf. Martinez v. Bynum, 461 U.S. 321 (1983) (analyzing residency requirement for free schooling under the Equal Protection Clause).

67 See Maher v. Roe, 432 U.S. 464, 474 (1977) (analyzing the denial of benefits under the fourteenth amendment).

68 Pay-or-play schemes would require employers either to pay a tax or to provide insurance that would help finance state-provided insurance to individuals not insured through their employment. The Massachusetts Health Security Act of 1988 effectively took this form (although it gave tax credits to employers that did provide insurance, rather than increase taxes on those that did not). See GAO Report, supra note 2, at 32-33. The federal plan proposed by the Senate Democratic Leadership in the 102nd Congress also took this form. See S. 1227, 102nd Cong., 1st Sess. (1991).

69 22 U.S. (9 Wheat.) 1 (1824).

70 Such federal regulation may be direct or indirect. Direct federal regulation of health insurance, for example, may take the form of uniform national standards for employee benefit plans. Alternately, the federal government may indirectly impact private health insurance through tax law exemptions of employer contributions for the purchase of employee health insurance. See Barry Furrow Et al., Health Law 543-44 (2d ed. 1991).

71 42 U.S.C.A. §§ 1395-1395ccc (West 1992 & Supp. 1993).

72 Id. §§ 1396-1396u (West 1992 & Supp. 1993).

73 29 U.S.C.A §§ 1001-1461 (West 1985 & Supp. 1993).

74 Pub. L. No. 101-336, 104 Stat. 327 (codified as amended at 42 U.S.C.A. §§ 12101-12213 and in scattered sections of 29 U.S.C.A. and 47 U.S.C.A.).

75 The Universal Healthcare Almanac 91-3 (Linda L. Cherner ed., 1993).

76 Greaney, supra note 25, at 192-93.

77 Stone, supra note 1, at 55.

78 Id. at 55.

79 For a discussion of Medicaid and Medicare waivers, see State Cost Control System Experiments, 3 Medicare and Medicaid Guide (CCH) H 13,655 (1990). President Clinton has recently ordered administrators to streamline and speed up the Medicaid waiver process. Paul Richter, Clinton Orders Easier Medicaid Rules for States, L.A. Times, Feb. 2, 1993, at Al.

80 GAO Report, supra note 2, at 76.

81 For example, there are so-called optional services, such as prescription drugs, that states can choose to provide. See 42 U.S.C.A. §§ 1396d(a)(10), 1396d(a)(12) (West Supp. 1993).

82 For example, states must provide services to certain categories of persons. See, e.g., 42 U.S.C.A. § 1396a(a)(10)(A) (West Supp. 1993). In addition, even when providing optional services, states must assure that they are “sufficient in amount, duration, and scope to reasonably achieve [their] purpose.” 42 C.F.R. § 440.230 (1992). States can get waivers for some federal mandates. See supra note 75 and accompanying text.

83 Bobinski, supra note 52, at 273 n.62.

84 In 1987, Medicaid insured only 42% of those with incomes below the federal poverty line. U.S. Bipartisan Comm'n on Comprehensive Health Care, A Call for Action: Final Report, Executive Summary 3 (1990) [hereinafter U.S. Bipartisan Commission].

85 496 U.S. 498, 512 (1990). The Boren Amendment requires state reimbursement of medical providers at rates that “the State finds, and makes assurances satisfactory to the Secretary [of Health and Human Services], are reasonable and adequate to meet the costs” of “efficiently and economically operated facilities … .” 42 U.S.C.A. § 1396a(13)(A) (West Supp. 1993).

86 Wilder, 496 U.S. at 506.

87 See, e.g., Temple Univ. v. White, 941 F.2d 201, 210 (3d. Cir. 1991), cert, denied, 112 S. Ct. 873 (1992); Pinnacle Nursing Home v. Axelrod, 928 F.2d 1306, 1314 (2d Cir. 1991).

88 Bobinski, supra note 52, at 275.

89 29 U.S.C.A. §§ 1051-1061, 1081-1086 (West 1985 & Supp. 1993).

90 Id. §§ 1021-1031, 1101-1114 (West 1985 & Supp. 1993).

91 Bobinski, supra note 52, at 276-77; Daniel M., Fox and Daniel C., Schaffer, Health Policy and ERISA: Interest Groups and Semipreemption, 14 J. Health Pol., Pol'y & L. 239, 240 (1989).Google Scholar The Act was amended to require that employers who provide insurance offer continuation coverage to certain employees who would otherwise lose their benefits. See 29 U.S.C.A. §§ 1161-1167 (West Supp. 1993).

92 120 Cong. Rec. 29,197 (1974) (Statement of Rep. John Dent), cited in Shaw v. Delta Airlines, 463 U.S. 85, 99 (1983).

93 Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9-11 (1987).

94 See infra text accompanying notes 128-167.

95 29 U.S.C.A. § 1144(a) (West 1985).

96 Id. § 1144(b)(2)(A).

97 Id. § 1144(b)(2)(B).

98 See, e.g., Wadsworth v. Whaland, 562 F.2d 70 (1st Cir. 1977), cert, denied, 435 U.S. 980 (1978); Standard Oil Co. v. Agsalud, 442 F. Supp. 695 (N.D. Cal. 1977), aff'd, 633 F.2d 760 (9th Cir. 1980), aff'd mem., 454 U.S. 801 (1981); see also Fox & Schaffer. supra note 91, at 245.

99 4 4 2 F. Supp. 695 (N.D. Cal. 1977), aff'd, 633 F.2d 760 (9th Cir. 1980), aff'd mem., 454 U.S. 801 (1981).

100 HAW. Rev. Stat. §§ 393-1 to 393-51 (Michie 1988 & Supp. 1992).

101 For a description of the Act and the challenge to it, see Michael G., Pfefferkorn, Comment, Federal Preemption of State Mandated Health Insurance Programs Under ERISA-The Hawaii Prepaid Health Care Act in Perspective, 8 St. Louis U. Pub. L. Rev. 339 (1989).Google Scholar

102 Standard Oil, 442 F. Supp. at 706-07.

103 See Act of Jan. 14, 1983, Pub. L. No. 97-473, § 301, 96 Stat. 2605, 2611-12 (1983) (partially codified at 29 U.S.C.A. § 1144(b)(5) (West 1985 & Supp. 1993)). The amendment contained a provision stating, “[it] shall not be considered a precedent with respect to extending such amendment to any other State law.” Id. § 301(b). The legislative history of the amendment is set forth in Fox and Schaffer, supra note 91, at 248-51.

104 Standard Oil, 442 F. Supp. 695 (N.D. Cal. 1977), aff'd, 633 F.2d 760 (9th Cir. 1980), aff'd mem., 454 U.S. 801 (1981). In addition, lower courts have struck down similar state laws in California and Minnesota. See St. Paul Elec. Workers Welfare Fund v. Markman, 490 F. Supp. 931 (D. Minn. 1980); Hewlett-Packard Co. v. Barnes, 425 F. Supp. 1294 (N.D. Cal. 1977), aff'd, 571 F.2d 502 (9th Cir. 1978), cert, denied, 439 U.S. 831 (1978).

105 463 U.S. 85 (1983).

106 Id. at 96-97. The Supreme Court recently reaffirmed this holding. See District of Columbia v. Greater Washington Bd. of Trade, 113 S. Ct. 580 (1992). The Shaw Court also stated that actions that affect plans in “too tenuous, remote or peripheral a manner” are not preempted. Shaw, 463 U.S. at 100 n.21.

107 471 U.S. 724 (1985).

108 Id. at 742-44. See also Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 46-49 (1987).

109 Metropolitan Life, 471 U.S. at 744.

110 W. at 746-47.

111 498 U.S. 52, 111 S.Ct. 403 (1990) (holding that Pennsylvania's Motor Vehicle Finance Responsibility Law was preempted to the extent that it applied to self-insured plans). For criticism of this decision and the Court's reading of the deemer clause, see James R., Bruner, Note, AIDS and ERISA Preemption: The Double Threat, 41 Duke LJ. 1115, 1138-55 (1992).Google Scholar

112 E.g., District of Columbia v. Greater Washington Bd. of Trade, 113 S. Ct. 580 (1992).

113 See Bobinski, supra note 52, at 290-91. States can, however, mandate the benefits provided by employers through commercial insurers. Id.

114 E.g., E-Systems, Inc. v. Pogue, 929 F.2d 1100 (5th Cir. 1991).

115 See N.Y.Ins.Law§ 3231 (Consol. 1993). Abroad reading of ERISA preemption, such as that espoused by the United Wire district court, might conceivably call such laws into question, since they effectively require ERISA groups to cross-subsidize the insurance of other subscribers. See infra notes 133-138 arid accompanying text. Cf. infra notes 139-167 and accompanying text.

116 Bobinski, supra note 52, at 295.

117 U.S. Bipartisan Commission, supra note 84, at 2-3; Stone, supra note 1, at 57.

118 GAO Report, supra note 2, at 20.

119 946 F.2d 401, 403 (5th Cir. 1991), cert, denied, 112 S. Ct. 1556 (1992). It is unclear, however, whether the ADA prohibits such employer actions. But see Donaghey v. Mason Tenders Dist. Council Trust Fund, 25 Daily Lab. Rep. (BNA) D-l (Jan. 28, 1993) (text of EEOC District Director's Determination that employer's modification of “health insurance plan to explicitly exclude payment for expenses arising from HIV infections, AIDS, and/or AIDS related complexes“ violated the ADA); infra notes 170-72 and accompanying text.

120 Mass. Gen. L. ch. 151A, § 14(G) (1990).

121 Bobinski, supra note 52, at 317; Fox and Schaffer, supra note 91, at 253.

122 See United Wire, Metal & Mach. Health & Welfare Fund v. Morristown Memorial Hosp., 1993 U.S. App. Lexis 11112 (3d Cir. May 14, 1993); Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984), cert, denied, 472 U.S. 1008 (1985). But see Travelers Ins. Co. v. Cuomo, 813 F. Supp. 996 (S.D.N.Y. 1993). For a discussion of Travelers, see infra notes 160-67 and accompanying text.

123 1992 Minn. Sess. Law Serv. 549 (West).

124 See Boyle v. McClung, Health Care Daily (BNA), Jan. 22, 1993 (D.Minn. Dec. 14, 1992).

125 Fox and Schaffer, supra note 91, at 246.

126 See supra notes 96-114 and accompanying text.

127 See supra notes 97-114 and accompanying text.

128 See infra notes 133-67 and accompanying text.

129 See United Wire, Metal & Mach. Health & Welfare Fund v. Morristown Memorial Hosp., 1993 U.S. App. Lexis 11112, at *11-*12 (3d Cir. May 14, 1993) (quoting Fort Halifax Packing Co. v. Coyne, 482 U.S. 1, 9 (1987)).

130 See supra note 18 and accompanying text.

131 I wish to thank Dan Schaffer for the observation that ERISA cases resemble turn-of-thecentury constitutional law cases in which the Supreme Court held that certain activities, such as manufacturing, were inherently local and, thus, not subject to regulation by Congress. See Ham mer v. Dagenhart, 247 U.S. 251 (1918); U.S. v. E.C. Knight Co., 156 U.S. 1 (1895). At the same time, the Court found that states lacked authority to enact such regulations. See, e.g., Lochner v. New York, 198 U.S. 45 (1905).

132 Fox and Schaffer, supra note 91, at 240. ERISA does impose certain disclosure and fiduciary duties on the administrators of employee benefits plans. See 29 U.S.C.A. §§ 1021-1031, 1101-1114 (West 1985 & Supp. 1993).

133 793 F. Supp. 524 (D.N.J. 1992), rev'd, 1993 U.S. App. Lexis 11112 (3d Cir. May 14, 1993).

134 1993 U.S. App. Lexis 11112, at *29 (3d Cir. May 14, 1993) (Nygaard.J., dissenting). .

135 813 F. Supp. 996 (S.D.N.Y. 1993).

136 1993 U.S. App. Lexis 11112 (3d Cir. May 14, 1993). Similar respect for state authority was shown in NYSA-ILA Medical and Clinical Servs. Fund v. Axelrod, 92 Civ. 2779 (JSM), 1993 U.S. Dist. Lexis 2011 (S.D.N.Y. February 23, 1993) (ERISA did not preempt N.Y. law taxing hospitals).

137 See United Wire, 793 F. Supp. at 527-28; Health Care Facilities Planning Act, 1978 N.J. Laws ch. 83 (current version at N.J. Stat. Ann. §§ 26:2H-1 to 26:2H-26 (West 1987 & Supp. 1992-1993)). Ironically, this law was a model for Medicare's prospective payment system. Furrow Et al., supra note 70, at 727.

138 United Wire, 793 F. Supp. 524, 535-36 (D.N.J. 1992).

139 United Wire, 1993 U.S. App. Lexis 11112, at *10 (quoting Shaw v. Delta Airlines, 463 U.S. 85, 100 n.21 (1983)).

140 Id. at *10.

141 Id. at *17, *25.

142 749 F.2d 133 (2d Cir. 1984), cert, denied, 472 U.S. 1008 (1985) (upholding New York's hospital rate-setting scheme). The district court in Travelers Insurance refused to follow Rebaldo, concluding that it was no longer sound in light of subsequent Supreme Court decisions. Travelers Insurance, 813 F. Supp. at 1005.

143 United Wire, 1993 U.S. App. Lexis 11112, at *19 (quoting Rebaldo, 749 F.2d at 138).

144 Id. (quoting Rebaldo, 749 F.2d at 139).

145 Id. at *26. The court's argument here was strengthened by the fact that the plans had not challenged the basic DRG rates set by New Jersey, even though those rates effectively established the cross-subsidization of some patients within a DRG by others within the same group. Id.

146 Id. at *27.

147 Id. at *27-*28.

148 Id. at *13.

149 Id. at *16. The court found that the mere fact that the state law increased costs did not impair the plans’ ability to function across state lines because plans often find that the cost of doing business varies from region to region. Id. at *17.

150 Judge Nygaard's opinion is far more nuanced than that of the district court. For example, unlike the district court, Judge Nygaard conceded that some cross-subsidization is common in the health care context. Id. at *51. Further, unlike the district court, he recognized that all police power regulations impose some costs on ERISA plans. Id. at *49-*52.

151 Id. at *33-*36.

152 Providers inevitably pass much of the costs of such laws onto other payers. Self-insured, employment-based groups protected by ERISA are major payers of medical costs. Furrow Et al., supra note 70, at 698-99. Moreover, commercial insurers will pass much of their increased costs onto their ERISA plan subscribers. See Travelers Ins. Co. v. Cuomo, 813 F. Supp. 996, 1003 (S.D.N.Y. 1993).

153 After all, licensing laws also raise the cost of medical care. Milton Friedman, Capitalism and Freedom 149-58 (1962).

154 United Wire, 1993 U.S. App. Lexis 11112, at *50-*54 (3d Cir. May 14, 1993) (Nygaard.J., dissenting).

155 Id. at *54.

156 Id. at *52-*54.

157 See id. at *52-*53.

158 Id.

159 This view of the health care system echoes the claims made by the deregulation movement, which has long viewed such competition and bargaining as the best way to reduce health care prices. See Greaney, supra note 25, at 179-80; Clark C Havighurst, Private Reform of Tort Law Dogma: Market Opportunities and Legal Obstacles, 49 L. & Cont. Probs. 143, 147 (1986).

160 813 F. Supp. 996, 999-1000 (S.D.N.Y. 1993). The surcharges were designed to ensure the economic viability of Blue Cross and Blue Shield's community pools and to induce Health Maintenance Organizations (“HMOs“) to enroll Medicaid beneficiaries. Id. at 1003-04.

161 Id. at 1003 (citation omitted). In reaching this conclusion, the court refused to follow Rebaldo v. Cuomo, 749 F.2d 133 (2d Cir. 1984), cert, denied, 472 U.S. 1008 (1985), on the theory that recent Supreme Court cases cast doubt on that case's reasoning. This view was refuted by the Third Circuit in United Wire, 1993 U.S. App. Lexis 11112, at *20-*21 & n.8 (3d Cir. May 14, 1993), and the district court in NYSA-ILA Medical and Clinical Servs. Fund v. Axelrod, 92 Civ. 2779 (JSM), 1993 U.S. Dist. Lexis 2011, at *8 (S.D.N.Y. Feb. 23, 1993).

162 This reasoning is similar to that employed by the district court in United Wire. See 793 F. Supp. 524, 535-36 (D.N.J. 1992). However, it goes further because there were no commercial insurers as intermediaries in United Wire. In Travelers Insurance, the court found that the surcharges were unlawful even when the ERISA plans were not the payers of the hospital charges. See Travelers Insurance, 813 F. Supp. at 1012. See also Stuart Hosp. Corp. v. Aetna Health Mgmt., 800 F. Supp. 328 (E.D. Va. 1992) (ERISA preempts state law regulating PPOs because it interferes with plan's ability to contract with commercial insurers to receive the type of PPO that the plan desires).

163 Travelers Insurance, 813 F. Supp. at 1006.

164 See id. at 1008.

165 W. at 1007 n.14.

166 Judge Nygaard, however, did not extend his reasoning to ERISA's savings clause. He also recognized the existence of cross-subsidies and the fact that all state regulations impose some costs on ERISA plans. See supra note 150 and accompanying text.

167 813 F. Supp. at 1006.

168 See supra note 74.

169 The ADA defines disability as “(A) a physical or mental impairment that substantially limits one or more of the major life activities of such individual; (B) a record of such impairment; or (C) being regarded as having such an impairment.” 42 U.S.C.A. § 12102(2) (West Supp. 1993).

170 ADA § 501(c) (codified at 42 U.S.C.A. § 12201(c) (West 1993)).

171 See 42 U.S.C.A. § 12201(c)(3) (West 1993). Underwriting practices that serve as a subterfuge for discrimination are still prohibited. See id. § 12201(c); see also Donaghey v. Mason Tenders Dist. Council Trust Fund, 25 Daily Lab. Rep. (BNA) D-l (Jan. 28, 1993) (text of EEOC District Director's Determination), supra note 119. It is arguable that, in order for self-insured plans to be exempt under 501(c)(2), they must still comply with state anti-discrimination laws. If so, the ADA could provide a back door handle for state regulation of medical underwriting by self-insured plans. The legislative history of the section, however, suggests that Congress meant to maintain the ability of employers to self-insure and exempt general insurance activities by ERISA and non-ERISA groups from the ADA. See House Comm. on the Judiciary, H.R. Rep. No. 485, 101st Cong., 2d Sess., pt. 3, at 70 (1990), reprinted in 1990 U.S.C.C.A.N. 267, 252.

172 Stone, supra note 1, at 52-53.

173 42 U.S.C.A. § 12132 (West 1993).

174 See id. § 12102(2).

175 The problem is explained in David C. Hadorn, The Problem of Discrimination in Health Care Priority Setting, 268 JAMA 1454 (1992). As Hadorn explains, the dilemma is exacerbated by comorbidities that may actually reduce the efficiency of particular treatments for certain classes of individuals, thereby making the provision of such treatments economically wasteful. According to Hadorn, the problem can be resolved by careful use of medical criteria, although he recognizes that data are not always available. Id. at 1457-58.

176 For a discussion of the Oregon plan, see Michael J. Garland, Justice, Politics and Community: Expanding Access and Rationing Health Services in Oregon, 20 L. Med. & Health Care 67 (1992); Robert Pear, U.S. Backs Oregon's Health Plan for Covering All Poor People, N.Y. Times, Mar. 20, 1993, at 8. For an analysis of the plan under the ADA, see Note, The Oregon Health Care Proposal and the Americans with Disabilities Act, 106 Harv. L. Rev. 1296 (1993).

177 See Garland, supra note 176, at 68-73 (discussing the process that the state used).

178 The Oregon plan, however, does not propose to limit the benefits of the elderly or disabled to those ranked high on the list. See id. at 74.

179 42 U.S.C.A. § 1315(a) (West 1992). Title II of the ADA would have applied, however, even if the Oregon plan did not involve Medicaid. See 42 U.S.C.A. §§ 12131-12165 (West 1993).

180 Letter from Louis W. Sullivan, Secretary of Health and Human Services, to Barbara Roberts, Governor of Oregon (Aug. 3, 1992) (on file with the American Journal of Law & Medicine).

181 See id.

182 HHS Approves Oregon's Medicaid Waiver Request with Conditions, 2 Health L. Rep. (BNA), No. 12, at 355 (Mar. 25, 1993).

183 Id.

184 Id. Those with co-morbidities “have certain medical conditions that would make other health problems more serious.” Id.

185 Senate Comm. on Labor and Human Resources, S. Rep. No. 116, 101st Cong., 1st Sess. 44 (1989).

186 469 U.S. 287 (1985).

187 29 U.S.C.A. § 794 (West 1992).

188 Hadorn, supra note 175, at 1457-58.

189 A bill introduced in Congress by Senators Leahy and Pryor sought to take a step in that direction by creating a consolidated waiver process for Medicare, Medicaid, and ERISA. See State Care Act of 1992, S. 3180, 102d Cong., 2d Sess. (1992).

190 See generally Hearing on State Health Care Plans Before the Senate Comm. on Finance, 102d Cong., 2d Sess. (Sept. 9, 1992) (prepared statement of Roy Romer, Governor of Colorado, George S. Mickelson, Governor of South Dakota, & Howard Dean, Governor of Vermont, on behalf of National Governors’ Association) (forthcoming 1993).

191 Id.; see also B. Drummond Ayres Jr., As U.S. Policy Makers Debate, States Move Ahead on Health Care Overhaul, N.Y. Times, Apr. 25, 1993, § 1, at 30.