When Congress passed the Employee Retirement Income Security Act (ERISA) in 1974, it planted the seeds of the managed care revolution: The ERISA shield from state regulation drove the transformation of health insurance from physician-driven fee-for-service reimbursement to insurer-controlled negotiated reimbursement. In the mid-1980s, the U.S. Supreme Court established the broad outlines of ERISA pre-emption of state regulation.
For more than a decade, the Court was silent while managed care organizations increased their domination of health care services through their ability to escape state regulations that made traditional insurance models less competitive. The Court revisited managed care regulation in cases starting in 2000 and culminating this term with Kentucky Assn. of Health Plans v. Miller, 123 S. Ct. 1471 (2003). This article discusses how these cases are likely to reshape the managed care market and what questions the Court left unanswered in Kentucky.
