Blue Cross raises concerns over ERISA preemption lawsuit during North Dakota hearings

In a recent meeting of the North Dakota Senate Appropriations - Government Operations Division, significant discussions centered around the regulation of Pharmacy Benefit Managers (PBMs) and the implications of health insurance mandates on self-funded plans. The meeting highlighted concerns from Blue Cross regarding potential taxpayer-funded lawsuits related to ERISA, the federal law governing self-funded health plans.

The testimony presented emphasized that approximately 450,000 members in North Dakota, with around 60% being self-funded, could be affected by the proposed legislation. The speaker noted that while PBM regulation has gained traction nationally, there are critical differences between self-funded and fully insured plans. Self-funded plans, typically offered by larger employers, are not subject to state law and are governed by ERISA, which raises concerns about the legality of certain state mandates.

A key point of contention discussed was the potential for new state laws to be challenged in court, similar to previous cases that have been deemed preempted by ERISA. The speaker urged caution, suggesting that it would be prudent to await the outcome of the ongoing Mulready case at the U.S. Supreme Court before advancing similar legislation in North Dakota. This caution stems from the belief that legislative changes driven by litigation could pose significant risks.

Additionally, the meeting addressed the financial impact of health insurance mandates, with estimates indicating that state-imposed mandates could exceed $1 billion over a three-year period. This figure underscores the growing concern among stakeholders about the sustainability of health insurance costs in the state.

As discussions continue, the implications of these legislative efforts will be closely monitored, particularly regarding their potential effects on both self-funded and fully insured health plans in North Dakota. The committee's next steps will likely involve further analysis of the proposed regulations and their alignment with ongoing legal challenges at the federal level.