S-2086-119
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
Sponsored by Rand Paul (R-KY)
What it does
This bill would amend the Employee Retirement Income Security Act of 1974 (ERISA) to allow newly created entities called "health marketplace pools" to be treated as employers for the purpose of offering group health insurance. Any individual or employer that joins such a pool could access group health coverage — including drug-only plans — regardless of whether they share a common employer. Pools could not deny membership based on a person's health status, and multiple pools could operate in the same geographic area.
Who benefits
Self-employed individuals and gig workers who currently lack access to employer-sponsored group coverage. Small business owners and their employees who cannot afford individual small-group premiums. Freelancers, independent contractors, and part-time workers without employer benefits. Trade associations and professional organizations that could form or join pools on behalf of members. Insurers and third-party administrators who would gain a new market segment. Consumers seeking drug-only coverage plans, which are not currently permitted as standalone group plans.
Who is hurt
State insurance regulators would lose authority over these pools, since ERISA-governed plans are largely exempt from state insurance mandates. Insurers selling individual and small-group plans in state-regulated markets could face competitive pressure if healthier enrollees migrate to marketplace pools. Consumers in pools that attract a sicker-than-average membership could face higher premiums over time. State-mandated benefit requirements — such as mental health parity, maternity coverage, or specific drug coverage rules — may not apply to these plans. Employees of small businesses whose employers join a pool may have less recourse under state consumer protection laws.
Supporters argue
Supporters argue that the current system locks millions of self-employed Americans and small business workers out of the cost advantages that large employers enjoy, forcing them into more expensive individual markets. By allowing voluntary risk pooling across unrelated individuals and employers under ERISA, the bill would expand access to group-rate coverage and give consumers more choices — including streamlined drug-only plans for those who primarily need prescription coverage. They contend that competition from these pools would pressure existing insurers to lower premiums across the board.
Opponents argue
Opponents argue that because ERISA preempts state insurance law, these pools would be able to sidestep state-mandated benefits — such as mental health coverage, maternity care, and chronic disease treatments — potentially offering bare-bones plans that attract younger, healthier enrollees. They contend this "adverse selection" dynamic would drain healthier members from ACA-compliant markets, raising premiums for those who remain, including people with pre-existing conditions. Critics also point to a history of fraud and insolvency in loosely regulated association health plans, citing the Department of Labor's 2019 court-ordered rollback of a similar rule.
Constitutional context
Congress has broad authority to regulate employee benefit plans under the Commerce Clause and has exercised that authority through ERISA since 1974. ERISA's express preemption of state insurance laws has been repeatedly upheld. However, post-Loper Bright (2024), any agency regulations implementing this bill — such as DOL rules defining pool eligibility — would face independent judicial scrutiny rather than deference, potentially narrowing the bill's practical reach.
Checks and balances
Congress expands the definition of "employer" under ERISA, giving the executive branch (Department of Labor) new rulemaking and enforcement authority over health marketplace pools; state insurance regulators lose oversight authority over ERISA-governed pools, and federal courts retain review power over DOL implementation rules.
Historical precedent
The Department of Labor issued a 2018 rule expanding association health plans under a similar ERISA theory; a federal district court vacated key provisions in 2019, finding the rule improperly stretched the definition of "employer" beyond what ERISA's text and purpose allowed.