Waivers will be granted, and increased taxes solve ERISA preemption

The first step on a state’s road to a quasi-single payer system is to obtain a waiver from the ACA. This is well within reach because the act includes language that permits a state to receive a waiver from the ACA’s strictures, beginning in 2017. A state can be granted this waiver if it demonstrates that its alternative would provide coverage at least as good, for at least as many people, as the ACA would, and not add costs to the federal budget. For states that receive waivers, the federal government must provide funds to the state that equal what it would spend pursuant to the ACA. A state promising to provide comprehensive, universal care would easily clear this hurdle.

Achieving integration between a state system and Medicare and Medicaid would be more difficult because the law does not permit a broad waiver from these programs. But the law does provide ample room for the administration of these programs within a state to be altered to align billing systems and prices. This would allow Medicare and Medicaid to appear to providers and patients to be almost seamlessly integrated with a state system, although this strategy would require a state to dedicate resources to reconcile claims with the federal government.

The other major legal hurdle for a state to overcome is posed by the 1974 Employee Retirement Income Security Act (ERISA), which forbids states from regulating employer benefits plans. But a small body of case law provides grounds for cautious optimism that the hurdles of ERISA can be overcome. A state could insulate its system from being struck down on ERISA grounds by legislating alternative funding options, such as payroll, income or sales taxes.