High court's clear thinking on ERISA: Reining in HMOs

Thanks to the U.S. Supreme Court, health plans can no longer hide from state regulation. That could give physicians and patients greater strength in holding HMOs accountable for their decisions.

Editorial. May 5, 2003.

For many years, the U.S. Supreme Court has wrestled with a question that's central to the rights of patients and physicians: How far can states go in regulating the conduct of managed care companies?

In recent rulings, the court has tended to side in favor of regulation, reining in the power of managed care organizations to act unilaterally in sabotaging treatment plans. But the cases have been limited in scope, and the rulings have been narrowly won -- usually 5-4.

If the court had ruled similarly in its April 3 decision in favor of Kentucky's any-willing-provider law, it would have been another positive step. Instead, the court boldly broke with that pattern.

First, the ruling was unanimous. More important, the reasoning behind the court's decision is expected to reverberate far beyond the issue of any-willing-provider laws and resonate to any case involving managed care regulation.

What the court did in Kentucky Assn. of Health Plans v. Miller was, in its own striking words, to "make a clean break" from past cases in which the justices tried to parse the meaning of various federal laws to determine what states could regulate.

The McCarran-Ferguson Act of 1948 affirmed states' authority to regulate "the business of insurance." But the Employee and Retirement Security Act of 1974, better known as ERISA, preempts state laws that would relate "to any employee benefit plan," which courts traditionally have interpreted to include employer-provided health insurance. (This even though ERISA itself also allows an exemption for state laws "which regulate insurance.")