Proposed Department of Labor Regulations to Refine Health Plan Fiduciary Duties

In the current landscape of U.S. employer-sponsored health insurance (ESI), escalating costs and declining value are pressing issues that are attributed partly to fiduciaries' lack of diligence in plan selection. Scholars Amy B. Monahan and Barak D. Richman propose that the Department of Labor (DOL) should leverage its authority under the Employee Retirement Income Security Act (ERISA) to enforce more stringent regulations on health care plan fiduciaries. They argue that the DOL's failure to regulate these aspects has created a regulatory vacuum, allowing for rising costs and inadequate plan options that overburden the lowest income workers.

Monahan and Richman suggest implementing rules that would require fiduciaries to consider factors such as administrative fees, network adequacy, and clinical quality when selecting health care plan administrators. Additionally, they advocate for rulemaking that would make fiduciaries consider the overall value of health plans, balancing cost against quality. They also propose a controversial yet potentially transformative requirement for fiduciaries to publicly disclose the cost, quality, and value metrics of selected plans and all bidding contenders.

These recommendations aim to enhance transparency and accountability in ESI plan selection, potentially improving the quality and affordability of health insurance while reducing litigation risks for employers that opt for high-value plans. The scholars underscore the potential economic benefits of these reforms, given the extensive reach of employee benefits across the U.S. economy.