(This story was updated at 3:40 p.m. ET.)
In a win for insurers and a loss for states trying to collect data for healthcare reform efforts, the U.S. Supreme Court on Tuesday decided 6-2 that a federal law protects a self-funded insurer from having to share certain information with the state of Vermont.
A Vermont official, however, expressed optimism after the ruling Tuesday that the state may still be able to work with other states to press the federal government for a solution.
The court ruled in Gobeille v. Liberty Mutual Insurance Co. (PDF) that a federal law takes precedence over a Vermont state law, shielding the self-funded insurer and its third-party administrator from having to share the data with the state.
Vermont argued (PDF) it needed certain data from Liberty, such as on claims, member eligibility and other issues, to help it improve the cost and effectiveness of healthcare. Liberty Mutual, however, argued that the federal Employee Retirement Income Security Act, known as ERISA, protected it and its third-party administrator from having to turn over the information.
The Supreme Court on Tuesday upheld a lower court's ruling that ERISA does take precedence over state law.
Justice Anthony Kennedy wrote in the court's majority opinion that Vermont's law “imposes duties that are inconsistent with the central design of ERISA, which is to provide a single uniform national scheme for the administration of ERISA plans without interference from laws of the several states.”
The decision is a “great victory” for insurers, said Steve Wojcik, vice president for public policy with the National Business Group on Health, an association representing large employers on healthcare and health benefits. He said it's a particularly important decision for employers that operate in multiple states that might otherwise have to comply with a conflicting patchwork of state laws and requirements.
“To have to comply with the laws and administrative requirements for running their plans in each of those jurisdictions would incur significant cost, significant staff time and really inhibit their ability to uniformly administer their plans,” Wojcik said.
The court remained true to the purpose of ERISA, said Stuart Gerson, a member at Epstein Becker Green who often represents insurers.
“Congress has spoken to a need for national uniformity and we and the Supreme Court are going to stand up for that,” Gerson said.
Others, however, decried the decision as a blow to state efforts at healthcare reform. Seventeen other states have all-payer databases similar to Vermont's, meaning the decision could affect them as well. Eighteen states and the District of Columbia filed briefs in the case supporting Vermont.
In a dissenting opinion, Justice Ruth Bader Ginsburg noted that 20% of Vermont's database information comes from self-insured plans.
“Stopping states from collecting claims data from self-insured employer health care plans would thus hugely undermine the reporting regimes on which Vermont and other States depend to maintain and improve the quality, and hold down the cost, of health care services,” Ginsburg wrote.
The American Hospital Association called the decision “disappointing,” saying that self-insured plans cover a growing number of people. About 63% of covered workers are enrolled in a plan that is either partially or totally self-funded, according to the Kaiser Family Foundation.
“It is essential that they be included in all-payer databases if those databases are to realize their potential,” the AHA said in a statement.
But Alfred Gobeille, chair of the Green Mountain Care Board and the official petitioner in the case, said in an interview Tuesday the decision won't necessarily stop states from continuing to seek the data from insurers for their databases. The Green Mountain Care Board is an independent board that oversees healthcare regulation in Vermont.
“It's tough when you lose, but I still see some hope in this decision,” Gobeille said.
He noted that though the justices decided against Vermont, they laid out a path by which Vermont and other states might still be able to compel self-funded insurers to share the information.
In the majority opinion, Kennedy wrote that the secretary of labor may be able to require self-funded insurers to report the kinds of data that Vermont wants. Kennedy wrote “these decisions are for federal authorities, not for the separate states.”
Gobeille said the question now is whether Vermont and the other states with all-payer databases can work together to seek a remedy from the Secretary of Labor. He acknowledged that getting such a remedy might not be easy or fast, but the justices seem to be saying it's possible. Also, the federal government filed a brief in the case supporting Vermont's efforts.
Gobeille also said the ruling, for the most part, doesn't stop Vermont from getting the data it needs. Self-funded insurers are mostly submitting the data to the state voluntarily, he said. The state has enough data to get a good view of the system, he said.
Vermont brought the case to the Supreme Court, however, to get clarity moving forward—and the decision Tuesday provided that, he said.
