Back in the ‘60s and early ‘70s, workers were getting burned. Take the Studebaker factory closure in 1963— over 4,000 employees lost pension benefits when the company tanked. Meanwhile, the Teamsters’ pension fund was loaning cash to shady Vegas deals. Congress said, “Enough.” ERISA was born to set rules for private-sector retirement and health plans, protecting workers from mismanagement.
For health plans, ERISA’s early impact was quieter. Most coverage was still fee-for-service, and HMOs were just a blip. The law required employers to provide clear plan details—think funding and benefits—and set fiduciary duties for plan managers. It also preempted state laws “relating to” these plans, giving employers a federal shield to avoid a patchwork of 50 state rules. Self-funded plans (where employers pay claims directly) got extra leeway, dodging state plan regs—a loophole that’d grow massive later.
Fast forward to now: ERISA governs health plans for about 139 million Americans across 2.5 million plans. It’s still split into two flavors:
