1 An Act Providing Access to Affordable, Quality, Accountable Health Care, Ch. 58 of the Acts of 2006, available at http://www.mass.gov/legis/laws/seslaw06/sl060058.htm.

2 The Special Commission on the Non-Group and Small Group Market Merger, an entity created by Chapter 58, estimates that the uninsured population in MA will drop to between 55,000 and 180,000 by 2012. Gorman Actuarial, DeWeese Consulting & Hinckley, Allen & Tringale, Impact of Merging the Massachusetts Non-Group and Small Group Health Insurance Markets 17 (2006) available at http: //www.mass.gov/Eoca/docs/doi/Legal_Hearings/NonGrp_SmallGrp/FinalReport_12_26.pdf

3 Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1144(a) (2006).

4 Patricia Butler, National Academy for State Health Policy, ERISA Preemption Manual for State Health Policy Makers 15 (2000), available at http://statecoverage.net/pdf/erisa2000.pdf.

5 Ch. 58 of the Acts of 2006, § 47 (2006); Telephone Interview with Brian Rosman, Research Director, Health Care For All, in Boston, Mass (October 2006) [hereinafter Rosman Interview].

6 Ch. 58, § 47

7 Ch. 58, § 44

8 See Butler, supra note 4, at 5.

9 Mariner, Wendy, State Regulation of Managed Care and the Employee Retirement Income Security Act, 335 New Eng. J. Med. 1986, 1986 (1996)CrossRefGoogle ScholarPubMed [hereinafter Mariner, State Regulation].

10 Id.

11 Id.

12 29 U.S.C. § 1144(a) (2006).

13 Mariner, State Regulation, supra note 9, at 1987.

14 Id.

15 Id.

16 Butler, supra note 4, at 19.

17 Id. at 15.

18 29 U.S.C. § 1002(1) (2006).

19 Id. § 1144(a).

20 Id.

21 Id. § 1144(b).

22 Kentucky Ass’n of Health Plans, Inc. v. Miller, 538 U.S. 329, 342 (2003).

23 Id.

24 Id. at 341.

25 Held that a state law regulates insurance for ERISA purposes if it did so in a “common-sense view of the matter” and it met the three factors from the McCarran-Ferguson “business of insurance” test. Metro. Life Ins. Co. v. Mass., 471 U.S. 724, 739-43 (1985). The “business of insurance” test is laid out in the McCarran Ferguson Act of 1945. A state law constituted insurance regulation if it pertained to an activity that (1) Spread Risk, (2) Involved the relationship between the insured and insurer, and (3) Was conducted by traditional insurers. Id. at 743.

26 Id. at 739.

27 Id.

28 29 U.S.C. § 1144(b)(2)(B) (2006).

29 Id.

30 Butler, supra note 4, at 16.

31 Snapshots: Health Care Costs, Kaiser Family Foundation, Comparing Projected Growth in Health Care Expenditures and the Economy (2006), available at http://www.kff.org/insurance/snapshot/chcm050206oth2.cfm [hereinafter Snapshots].

32 Id.

33 Id.

34 Id.

35 Id.

36 Id.

37 This question can be raised in two respects. First, how will the employer’s decisions affect the welfare of their own employees? Second, how will the employer’s decisions affect their ability to stay competitive in an increasingly global market? Id.

38 In 2005, approximately forty-six million Americans under the age of sixty-five (18% of the population) were uninsured, an increase of over seven million since 2000. The Kaiser Commission on Medicaid and the Uninsured, Kaiser Family Foundation, The Uninsured: A Primer, 3 (2006), available at http://www.kff.org/uninsured/upload/7451- 021.pdf.

39 Snapshots, supra note 31.

40 Moran, Donald W., Whence and Wither Health Insurance? A Revisionist History, 24 Health Aff. 1415, 1419 (2005)CrossRefGoogle Scholar.

41 Many are outlined in the Institute of Medicine’s report. Snapshots, supra note 31.

42 Approximately 650,000, or 10% of the population in Massachusetts. Facts at a Glance, Massachusetts Budget and Policy Center, August 28, 2007, available at http://www.massbudget.org/FactsataGlance2006HealthInsurance.pdf (estimating that, on average, one in ten residents of Massachusetts went without health insurance between 2004 and 2006).

43 Health Care Access and Affordability Conference Committee Talking Points 1 (2006), available at http:// www.hcfama.org/_uploads/documents/live/Conference%20Committee%20Talking%20Points .pdf.

44 Id.

45 Posting of John McDonough to A Healthy Blog, http://blog.hcfama.org/?p=256 (Jan. 28, 2006, 17:04 EST).

46 Massachusetts used to use the bulk of its Medicaid money to reimburse hospitals that serve the uninsured. For every dollar Massachusetts spent, the federal government would reimburse the state 50 cents under the old 1115(a) MassHealth Demonstration Waiver. A scheme was set up whereby the hospitals would also return 50 cents of each dollar they received from the state as part of an intergovernmental transfer. Thus, in effect, the federal government was funding 100% of Massachusetts Medicaid expenditures. To renew the waiver, the federal government required Massachusetts to cease this practice and begin directing their Medicaid dollars towards increased coverage. Brian Rosman, Research Director, Health Care For All, Lecture at the Boston University School of Law: Massachusetts Health Reform and the MassHealth Medicaid Waiver (Mar. 21, 2007).

47 Starting on July 1st, 2006. Posting of John McDonough to A Healthy Blog, http://blog.hcfama.org/?p=256 (Jan. 28, 2006, 17:04 EST).

48 Ron Fournier, Romney’s Health Care Plan Draws Praise from Hillary Clinton, Talk of ’08 Bid, Associated Press, April 5, 2006.

49 Ch. 58 of the Acts of 2006, § 101 (2006). .

50 Id.

51 The affordability scale is to be determined by the board of the Connector as well. Id.

52 These products will be sold out of a new market created by merging the existing small group and non group insurance markets. Id. § 114. This is expected to result in an estimated drop of 15% in non-group premium costs. Gorman Actuarial, LLC et al., Impact of Merging the Massachusetts Non-Group and Small Group Health Insurance Markets 10 (2006), available at http://www.mass.gov/Eoca/docs/doi/Legal_Hearings/ NonGrp_SmallGrp/FinalReport_12_26.pdf.

53 First, Chapter 58 creates an outreach program to enroll people currently eligible for MassHealth but are not signed up. Ch. 58, § 45. Second, Chapter 58 expands the eligibility of children from those living in families earning less than 200% FPL to those living in families earning less than 300% FPL. Id. § 15. Third, Chapter 58 restores the dental and vision services under MassHealth that were cut in 2002. Id. § 29.

54 The affordability scale is to be determined by the board of the Connector. Id. § 101.

55 Health Care Access and Affordability Conference Committee Report 3 (2006), available at http://www.hcfama.org /_uploads/documents/live/Conference%20Committee%20Report.pdf [hereinafter HCAA Conf. Comm. Report].

56 Ch. 58, § 12.

57 Id. § 13.

58 Rosman Interview, supra note 5.

59 Currently, the Massachusetts Department of Health Care and Financial Policy (DHCFP) estimate that the money raised by the Fair Share Contribution will be closer to 31 million. Id.

60 Ch. 58, § 47.

61 The cost per worker will be calculated to reflect a portion of the cost paid by the state for free care used by workers whose employers do not provide insurance. Ch. 58, § 47; HCAA Conf. Comm. Report, supra note 55, at 4.

62 Ch. 58, § 47; HCAA Conf. Comm. Report supra note 55, at 4.

63 114.5 Mass. Code Regs. 16.03(1)(a) (2006).

64 Id. 16.04(1)(b).

65 Div. of Health Care Finance and Policy, Bulletin for Employers – Update on Division’s Health Care Reform Regulations, available at http://www.mass.gov/Eeohhs2/docs/dhcfp/g/regs/hcr_employer_bulletin.doc.

66 Id.

67 Ch. 58, § 44; 114.5 Mass. Code Regs. 17.00.

68 Ch. 58,§ 44.

69 See 114.5 Mass. Code Regs. 17.00.

70 Id. at 17.04.

71 Id.

72 The Fair Share Contribution will be applied only to employers of eleven or more employees, and it will be capped at $295/worker. That cost will be derived from the state’s reimbursement expenses for free care provided to employees whose employers do not contribute to their health insurance premiums. Ch. 58, § 47; HCAA Conf. Comm. Report, supra note 55, at 4.

73 HCAA Conf. Comm. Report, supra note 55, at 4.

74 Ch. 58, § 44.

75 See 114.5 Mass. Code Regs. 17.04 (2006).

76 29 U.S.C. § 1144(a) (2006).

77 Id.

78 Id. § 1144(b).

79 Id. § 1144(b)(2)(B).

80 As stated previously, of all Americans covered by ERISA plans, approximately 43% are covered by self-insured plans that cannot be regulated by state laws under the “savings clause.” Butler, supra note 4, at 16. “The Patchwork nature of this regulation results not from thoughtful distinctions about policy, but rather from interpretations of a federal law that was never designed to regulate health benefits.” Mariner, State Regulation, supra note 9, at 1989.

81 Butler, supra note 4, at 15. In short, qualifying programs are those that provide medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability or death. See 29 U.S.C. § 1002(1).

82 Butler, supra note 4, at 19. In contrast, an employees’ voluntary decision to allow their employer to direct a portion of their wages to an insurance policy wholly independent of the employer does not constitute an ERISA plan. Id. at 16.

83 Standard Oil Co. of Cal. v. Agsalud, 633 F.2d 760 (9th Cir. 1980).

84 Id. at 766. Note: Because the development of Hawaii’s law overlapped with the creation of ERISA, Congress amended the statute to allow Hawaii’s law to stand. Butler, supra note 4, at 48 n.3.

85 Fort Halifax Packing Co., Inc. v. P. Daniel Coyne, 482 U.S. 1 (1987).

86 Id. at 23.

87 Butler, supra note 4, at 19.

88 Fort Halifax, 482 U.S. at 1.

89 Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 192 (4th Cir. 2007) (citing Local Union 598 v. J.A. Jones Constr. Co., 846 F.2d 1213, 1218 (9th Cir. 1988), aff’d mem., 488 U.S. 881 (1988) (striking a state law that mandated minimum contributions to an apprenticeship training fund as relating to ERISA plans)).

90 Fielder, 475 F.3d at 198.

91 Id. at 184.

92 Id.

93 Id. at 185.

94 Id. at 202; a “Hobson’s choice” is a choice between two undesirable options. RANDOM HOUSE DICTIONARY OF THE ENGLISH LANGUAGE 909 (2d ed., Random House, Inc. 1987).

95 New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 664 (1995).

96 See Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 193 (4th Cir. 2007).

97 Id.

98 Id.

99 Many health care advocates in Massachusetts, such as the organization Health Care For All, feel the amount being required of employers by the state under ch. 58 truly is minimal. In fact, they feel the 25% enrolled or 33% premium contribution does not satisfy the statutory definition of “fair and reasonable.” See Posting of John McDonough to A Healthy Blog, http://blog.hcfama.org/?p=532 (Sept. 8, 2006, 17:21 EST).

100 It should be noted that in opting for the later choice, employers also run the risk of being penalized by the Free Rider Surcharge. However, the risk of the Free Rider Surcharge driving up the $295 Fair Share Contribution maximum is very low. Under Chapter 58, employers are required to establish § 125 Cafeteria plans. Ch. 58 of the Acts of 2006, § 48 (2006). Subsequent state regulations indicate that even in the absence of a “fair and reasonable” contribution by an employer towards their employees’ health insurance premium costs, the creation of a § 125 Cafeteria plan voids the assessment of Free Rider Surcharge against that employer. 114.5 Mass. Code Regs. 17.00 (2006). Further, even if an employer declines to (1) make a “fair and reasonable” contribution to the health insurance premiums of their employees and (2) set up § 125 Cafeteria plans, the Surcharge only kicks in after the employees of the employer accumulate $50,000 worth of free care. Id. Based on the same rationale, it is also unlikely that the threat of paying the Free Rider Surcharge alone would create a “Hobson’s Choice” for an employer and force them to create an ERISA plan by way of making a “fair and reasonable” contribution to their employees’ health insurance premium costs.

101 Ch. 58, § 101.

102 Posting of John McDonough to A Healthy Blog, http://blog.hcfama.org/?p=856 (Mar. 6, 2007, 11:49 EST).

103 See supra Part IV(A)(2).

104 Id.

105 Id. at 17-18.

106 Interview with Wendy Mariner, Professor of Health Law, Bioethics, and Human Rights, Boston University School of Public Health, in Boston, Mass. (Nov. 22, 2006) [hereinafter Mariner Interview].

107 Patricia Butler, National Academy for State Health Policy, ERISA Implications for State Health Care Access Initiatives: Impact of the Maryland “Fair Share Act” Court Decision 6 (2006) available at http://statecoverage.net/SCINASHP.pdf [hereinafter Butler, Fair Share Act].

108 See supra Part IV(A)(2).

109 29 U.S.C. § 1144(a) (2006).

110 Ch. 58 of the Acts of 2006, § 44 (2006).

111 Id.; 114.5 Mass. Code Regs. 17.00 (2006).

112 Mariner Interview, supra note 106.

113 Metro. Life Ins. Co. v. Mass., 471 U.S. 724, 740 (1985) (emphasis added).

114 New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 665 (1995).

115 Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 96-99 (1983).

116 Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 191 (4th Cir. 2007) (citing Shaw, 463 U.S. at 96-97).

117 Id.

118 It refers to “Group Health Plans,” which unequivocally meet the minimum ERISA plan qualifying threshold. Mariner Interview, supra note 106.

119 NYS H.M.O. Conf. v. Curiale, 64 F.3d 794, 798-99 (2nd Cir. 1995) (Holding that despite a literal reference, the law did not relate to ERISA plans).

120 Id.

121 Fielder, 475 F.3d at 192.

122 Id. at 192 n.2.

123 Id. at 192 n.2 (citing California Div. of Labor Standards Enforcement v. Dillingham Constr., 519 U.S. 316, 325 (1997)).

124 Mariner Interview, supra note 106.

125 NYS H.M.O. Conf. v. Curiale, 64 F.3d 794, 800 (2nd Cir. 1995) (Holding that despite a literal reference, the law did not relate to ERISA plans).

126 Fielder, 475 F.3d at 191 (citing Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 97 (1983)).

127 New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 656 (1995).

128 Dillingham, 519 U.S. at 325.

129 Fielder, 475 F.3d at 203 (citing Dillingham, 519 U.S. at 325).

130 Id.

131 Id.

132 Butler, supra note 4, at 1.

133 Id. at 18 (quoting 120 CONG. REC. 29,197, Aug. 20, 1974).

134 William G. Schiffbauer, Hidden in Plain View: ERISA Preempts Provisions of Massachusetts ‘Play or Pay’ Health Care Reform Law, 14 Bureau of Nat’l Affairs Health Care Policy Report No. 37 at 1228 (Sept. 18, 2006).

135 Butler, supra note 4, at 18 (citing Fox, D.M. & Schaffer, D.C., Health Policy and ERISA: Interest Groups and Semipreemption, 14 J. Health Pol., Pol’y & L. 239, 248 (1989)Google ScholarPubMed).

136 Id. at 17 (quoting 120 Cong. Rec. 29, 942, Aug. 22, 1974) (emphasis added). The U.S. House of Representatives Labor and Education Committee conducted such a study three years later and its results supported the broad interpretation of preemption. No study has been undertaken since. Id. at 30 n.36 (citing H. R. Rep. No. 94-1785 at 47, 48).

137 Id. at 21.

138 Id. at 6.

139 Mariner Interview, supra note 106.

140 Id.

141 114.5 Mass. Code Regs. 16.04(1)(b) (2007).

142 See supra Part IV(B).

143 New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 662 (1995).

144 Id. at 661.

145 Id. at 662.

146 Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 194 (4th Cir. 2007).

147 Id.

148 Id.

149 See Butler, supra note 4, at 48.

150 Id.

151 Id.

152 Mariner Interview, supra note 106.

153 Especially in light of Gov. Romney’s candidacy for President in 2008.

154 Mariner Interview, supra note 106. Courts have ignored the wording of ERISA challenged legislation and looked to its purpose and in the past. See Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 192 (4th Cir. 2007) (citing American Med. Sec. v. Bartlett, 111 F.3d 358, 360 (4th Cir. 1997)) (stating that notwithstanding wording relating to the business of insurance in a regulation, ERISA’s deemer clause preempted the regulation because its purpose and effect was directed at self insured ERISA plans).

155 See supra note 61 and accompanying text (explaining how Chapter 58 calculates the Fair Share Contribution).

156 Mariner Interview, supra note 106.

157 Kaiser Family Foundation and the Health Research and Educational Trust, Employer Health Benefits 2006 Annual Survey 71 (2006), available at http://www.kff.org/insurance/7527/upload/7527.pdf.

158 Massachusetts Division of Health Care Finance and Policy, Health Insurance Survey of Massachusetts Employers: Core Results 10 (2005), http://www.statecoverage.net/statereports/ ma53.pdf.

159 Mariner, State Regulation, supra note 9, at 1989.

160 Retail Indus. Leaders Ass’n v. Fielder, 435 F. Supp. 2d 481, 496 n.15 (D. Md. 2006).

161 The conclusion that a spending requirement is the same as a benefits mandate does not necessarily follow from Supreme Court preemption analysis, leaving plenty of room for an appeal. See Butler, Fair Share Act, supra note 107, at 7.

162 Fielder, 435 F. Supp. 2d at 496 n.15.

163 See supra Part II. As outlined in Part II, Chapter 58 expands coverage by increasing Medicaid eligibility, restructuring the free care pool and the private insurance market, requiring individuals to purchase health insurance and demanding employer responsibility. Thus, in comparison to Maryland’s law targeting Wal-Mart, Massachusetts is requiring every conceivable party to make a contribution.

164 Rosman Interview, supra note 5.

165 See supra Part II.

166 Ch. 58 of the Acts of 2006, § 47 (2006).

167 Retail Indus. Leaders Ass’n v. Fielder, 475 F.3d 180, 184 (2007) (citing a report from the Maryland Department of Legislative Services on the proposed Fair Share Act addressed to the General Assembly).

168 Id.

169 Id. at 183.

170 Id. at 204 (Michael, J., dissenting); New York State Conf. of Blue Cross & Blue Shield Plans v. Travelers Ins. Co., 514 U.S. 645, 665 (1995).

171 Posting of John McDonough to A Healthy Blog, http://blog.hcfama.org/?p=256 (Jan. 28, 2006, 17:04 EST).

172 See Mariner, State Regulation, supra note 9, at 1986.