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NEW JERSEY COURT RULING COULD UNRAVEL HEALTHRIGHT; ERISA RULING MAY IMPACT FUNDING MECHANISM

 NEW JERSEY COURT RULING COULD UNRAVEL HEALTHRIGHT;
 ERISA RULING MAY IMPACT FUNDING MECHANISM
 BLOOMINGTON, Minn., June 17 /PRNewswire/ -- A recent New Jersey court ruling may set a legal precedent to challenge Minnesota's much touted HealthRight program, said Jeff Smedsrud of Communicating for Agriculture, a Minnesota-based advocacy association, speaking today at a Washington, D.C., conference on state health care reform initiatives.
 Minnesota's plan to provide improved access to health care relies in large part on a 2 percent hospital surtax and 2 percent provider tax.
 The May 27 ruling by Judge Alfred Wolin strikes down a hospital surcharge in New Jersey that was to be used to finance uncompensated care. Wolin ruled that the surcharge interfered with self-insured plans and union plans, which are exempt from all state laws under ERISA (the Employees Retirement Income Security Act of 1974). The federal ERISA law governs a variety of retirement and benefit plans offered to employees of large companies and members of labor unions.
 The ruling may be interpreted to disallow any hospital or provider to pass along taxes it collects from patients covered under self-insured plans. It is expected to be appealed.
 In Minnesota, about 60 percent of all people are covered under self- insured plans. Nearly all large employers utilize self-insured plans to provide their employees with health benefits.
 The New Jersey ruling has caught the attention of Minnesota Sen. Dave Durenberger and others in Congress who are introducing legislation to stop the ERISA exemption from, as Durenberger put it, standing "in the way of legitimate state efforts to expand access to health care." Durenberger said in the June 3 Congressional Record that the New Jersey ruling could "seriously jeopardize" HealthRight.
 The financing mechanism of HealthRight was the most hotly debated part of Minnesota's complex health access legislation.
 "If self-insureds are able to successfully argue that hospitals and providers can not pass on the tax to 60 percent of the people in Minnesota, the providers will then have to eat it or pass it on to those not covered under such plans. That means it falls squarely on the backs of small hospitals, small businesses and self-employed people," Smedsrud said.
 Smedsrud said he was not aware of plans by any Minnesota company that self-insures to challenge the legality of HealthRight's funding mechanism, but added, "When millions of dollars are at stake, and there is clear legal precedent, do we really think a court battle won't be in the offing? This all adds up to a serious threat to our state's efforts to provide health care to Minnesotans."
 Large companies have used the ERISA shield for years to exempt themselves from many state laws that govern health insurance, Smedsrud noted. For example, Minnesota and many other states have risk pools that provide basic health insurance for those unable to attain it for medical reasons from private companies. In Minnesota, the operating losses from the state plan -- known as MCHA -- are accessed against private insurance companies. Self-insureds have thus far successfully argued that they do not have to pay these assessments.
 Large companies have also used ERISA to limit coverage for specific illnesses. For example, some companies have begun to limit coverage for AIDS-related illnesses, even for those employees currently enrolled in a plan. Companies have used ERISA to take action against employees or individuals that would not be allowed under state laws for private insurance companies or most HMOs or Blue Cross/Blue Shield plans.
 "States like Minnesota can have the best of intentions but their efforts may ultimately prove futile until Congress removes the loopholes that too often allow the biggest and most creative companies to play by a different set of rules. Congress has failed to amend ERISA in the past, because it doesn't want to open a Pandora's box," Smedsrud said.
 A section in the Minnesota HealthRight law asks Congress to wave ERISA rules that will hinder that program. Whether Congress responds may ultimately decide the fate of HealthRight and similar programs now being considered in a host of other states, Smedsrud said.
 Smedsrud is executive vice president of Communicating for Agriculture, a national non-profit, non-partisan membership association. The organization represents 80,000 farmers, ranchers and small-business owners across the country.
 -0- 6/17/92
 /CONTACT: Bruce Abbe of Communicating for Agriculture, 800-445-1525/ CO: Communicating for Agriculture ST: Minnesota IN: SU:


KH -- MN008 -- 1126 06/17/92 13:52 EDT
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Date:Jun 17, 1992
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