Healthcare Freedom and Fairness Act
- Sponsor
- Rep. Van Duyne, Beth [R-TX-24]
- Committees
- Education and Workforce Committee (primary)
- Last action
- May 29, 2026
Bottom line
The Healthcare Freedom and Fairness Act expands the definition of 'employer' under ERISA to enable new health marketplace pools to offer group health plans, including standalone drug coverage, potentially increasing health insurance options for individuals and small businesses while altering regulatory oversight.
What it actually does
This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to allow new entities, termed 'health marketplace pools,' to be legally recognized as 'employers' for the purpose of offering group health plans or group health insurance coverage. These pools must meet specific organizational and non-discrimination requirements and are explicitly permitted to offer coverage for prescription or nonprescription drugs as the sole benefit. The bill also clarifies that participation in these pools does not establish an employer or joint employer relationship for other purposes and exempts them from certain multiple employer welfare arrangement (MEWA) regulations.
Proponents argue
Proponents argue that this bill will increase consumer choice and competition in the health insurance market by allowing new entities to form and offer group health plans, potentially leading to lower costs and expanded access to coverage. They contend that it provides greater flexibility, particularly by enabling standalone drug coverage, which can cater to specific consumer needs and reduce the burden on small employers or individuals seeking more tailored benefits.
Opponents contend
Opponents might argue that by allowing these health marketplace pools to operate under a modified ERISA framework and exempting them from certain MEWA regulations, the bill could weaken consumer protections and create a fragmented insurance market. They may express concerns that these pools could attract healthier individuals, leading to adverse selection in traditional insurance markets, or offer 'skinny' plans that do not provide comprehensive benefits, potentially undermining existing healthcare reforms.
The bill is concise and its core mechanism is clearly articulated, making it accessible for an informed reader to quickly grasp its primary intent and implications.
Section 2(a) and Section 736(a) of ERISA
Expansion of 'Employer' Definition for Health Marketplace Pools
This provision amends Section 3(5) of ERISA to include 'health marketplace pools' as entities that are deemed an 'employer' for the specific purpose of offering group health plans or group health insurance coverage. This redefinition allows these new entities to operate under ERISA's federal regulatory framework, rather than being subject solely to state insurance laws, when providing health benefits.
Supporters argue
Supporters contend that this expansion fosters innovation and competition by allowing new models for health coverage, thereby increasing choices for consumers and small businesses who struggle to access affordable group plans.
Critics contend
Critics argue that expanding the ERISA definition for these pools could create regulatory loopholes, potentially leading to less robust consumer protections compared to state-regulated plans, and could fragment the insurance market.
Tradeoffs
The provision balances the desire for increased flexibility and market-based solutions against concerns about maintaining strong consumer protections and preventing adverse selection in existing insurance markets.
Section 736(b)(1) of ERISA
Requirements for Health Marketplace Pool Organization
This section outlines the foundational requirements for a health marketplace pool. It mandates that the pool must be formed and maintained in good faith with the purpose of forming a risk pool to offer group health coverage. Crucially, it prohibits conditioning membership in the pool on any health status-related factor, ensuring a basic level of non-discrimination at the entry point.
Section 736(b)(2) of ERISA
Coverage Offering and Nondiscrimination Rules within Pools
This provision requires health marketplace pools to make group health plans or insurance coverage available to all members (and their employees/dependents). It allows rates to vary for individuals, subject to existing ERISA sections 701 and 702 (which cover portability, access, and renewability, and prohibit discrimination based on health status). It also states that the same coverage must be offered to all members, but allows for variations based on service area and permits underwriting or exclusions consistent with sections 701 and 702.
Section 736(b)(5)(B) of ERISA
Standalone Drug Coverage Option
This provision explicitly allows health marketplace pools to offer group health plans or group health insurance coverage that covers prescription or nonprescription drugs as the *only* benefit. This is a significant departure from typical comprehensive health plans, which usually bundle drug coverage with other medical benefits. It also allows for drug coverage in combination with other benefits.
Section 736(c) of ERISA
Clarification on Employer and Joint Employer Status
This section explicitly states that participating in or facilitating a group health plan or group health insurance coverage under this new framework shall not be construed as establishing an employer relationship for any purpose other than offering the group health plan or coverage. Furthermore, it clarifies that it does not establish a joint employer relationship for any purpose. This aims to limit the legal liabilities and obligations of entities involved in these pools to only those directly related to health benefit provision.
This amendment adds a new clause (iv) to ERISA Section 3(40)(A), which defines 'multiple employer welfare arrangement' (MEWA). The new clause explicitly states that a group health plan or group health insurance coverage offered by an entity meeting the requirements under Section 736(b) (i.e., a health marketplace pool) is *not* considered a MEWA. This means these pools are exempt from the specific state regulatory oversight that typically applies to MEWAs.
Section 3(3) amending Section 3(40)(A) of ERISA
Why it matters:This is a standard legislative practice for technical amendments to existing statutes. However, its placement in a conforming amendment section, rather than a primary operative section, might obscure its significant regulatory impact.
Case for: Proponents would argue that this exemption is crucial for the operational viability of health marketplace pools, preventing them from being subjected to potentially conflicting or burdensome state MEWA regulations that could hinder their ability to offer flexible, multi-state coverage.
Case against: Opponents would contend that exempting these pools from MEWA regulations removes an important layer of state oversight designed to protect consumers from solvency issues, fraud, and inadequate benefits, potentially exposing members to greater risks.
Estimated impact: This provision significantly alters the regulatory landscape for these new health marketplace pools, shifting oversight primarily to the federal ERISA framework and away from state insurance departments for MEWA-specific rules.