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State and city healthcare reforms collide with a U.S. law

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Tapping employers to cover more workers, or to contribute to a healthcare pool, is one of the most attractive means for cash-strapped cities and states to reduce the ranks of the uninsured. After the ruling in the Maryland case, adding businesses to the equation looked a lot harder.

National reforms exempt from ERISA

National healthcare plans wouldn't have to clear an ERISA hurdle. Partly for this reason, the problem could be tackled more aggressively at the national level, but it hasn't been, says Marian Mulkey of the California HealthCare Foundation, an independent organization based in Oakland working to improve the state's healthcare system.

A consensus may be emerging that the system needs to change, a sentiment expressed Tuesday by Health and Human Services Secretary Michael Leavitt, who, in a Harvard address, said "the healthcare system is fundamentally broken," the Harvard Crimson reported.

For the time being, however, states and localities must find creative ways to work within the law, in some cases giving national leaders some new ideas. Sen. Hillary Rodham Clinton's recent proposal bears some resemblance to the Massachusetts health plan approved in 2006 under former Massachusetts Gov. Mitt Romney.

No suit against Massachusetts plan – yet

The Bay State plan has so far avoided provoking an ERISA legal challenge, restoring some optimism among reformers in California, Illinois, and other states. "Massachusetts gave hope in the sense of not just ERISA, but the ability to have bipartisan consensus," says Richard Cauchi, health program director at the NCSL. "The insurers, employers, and the providers all were saying positive things."

The Massachusetts play-or-pay model has avoided a lawsuit so far, suggest experts, because all the stakeholders were involved in the negotiations, and, crucially, because the pay option for employers is less than under $300 per worker.

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