Is ERISA Up for the Job? Improving Employer-Sponsored Health Insurance Affordability

Is ERISA Up For The Job?

Improving Employer-Sponsored Health Insurance Affordability

June 2026

Employer-sponsored health insurance is increasingly unaffordable for employers and plan members. Affordability problems derive from a broken commercial health care market, plagued by consolidation and a complex web of profit-extracting intermediaries. These intermediaries include large, insurer-affiliated pharmacy benefit managers (PBMs) and third-party administrators (TPAs) that engage in anti-competitive and financially exploitative practices that exacerbate affordability problems.

The Employee Retirement Income Security Act of 1974 (ERISA) is the primary law governing most private employer-sponsored health insurance plans. Among other obligations, ERISA requires that health plan fiduciaries spend plan assets wisely, and bars health plans from paying more than reasonable compensation to service providers, including PBMs and TPAs. ERISA has long imposed these requirements, but the law is drawing new scrutiny as cost pressures increase and employers gain access to more information about what they are actually paying—and to whom.

Exploring Three Realms of ERISA

With support from the Peterson Center on Healthcare, CHIR explored ERISA across three interconnected realms to disentangle these complications and identify opportunities for reform. We first examine how ERISA’s information disclosure requirements can help employers be better purchasers of health care. We then consider whether and to what extent ERISA’s fiduciary requirements, enforced through private lawsuits, can drive better health plan stewardship in the wake of greater transparency, as happened a decade ago in the 401(k) industry. Finally, we probe whether and how the U.S. Department of Labor (DOL) can leverage its authority under ERISA to further advance health care cost containment and affordability.

Read the full issue brief here, or keep scrolling to read the key takeaways.

How Can ERISA Make the Health Care System More Transparent for Employers?

• Recent changes to and regulations under ERISA are expanding employers’ access to data on health care prices, claims, and service provider compensation—giving employers more tools to evaluate what they are paying and why.
• Significant barriers nonetheless remain under the current rules, both with respect to compliance and data usability.
• Congress and the DOL could place more direct disclosure obligations on service providers, and help create and fund new resources to help employers analyze and act on newly available information.

How Can ERISA Litigation Drive Better Health Plan Stewardship?

• ERISA authorizes plan members and plan sponsors, as fiduciaries, to bring a variety of claims for violations of ERISA, including its fiduciary obligations. Employers can be both plaintiffs and defendants in these lawsuits.
• Plan members in particular face numerous barriers to bringing suit. Courts generally have not recognized higher premiums, higher cost-sharing levels, or lost wages as actionable injuries, despite these outcomes being some of the primary effects of excess plan spending.
• Courts have also narrowly construed key elements of ERISA’s fiduciary framework to shield many employer and service provider activities from liability, including negotiating health care prices.
• In contrast, unreasonable service provider compensation—particularly hidden or variable administrative fees—appears more amenable to legal attack under ERISA.

How Can the Department of Labor Promote Affordability Under ERISA?

• The DOL has broad authority under ERISA to encourage or require better health plan stewardship. Beyond proposing new PBM compensation disclosure rules, to date the DOL has done relatively little with this power to promote affordability.
• Opportunities for more action include: collecting and analyzing more information on health plan service providers, their practices, and compensation; clarifying how ERISA’s fiduciary framework applies to the modern health care system through regulations and guidance; and prioritizing enforcement actions targeting PBM and TPA practices that are conflicted and contribute to higher spending.
• Current DOL leadership has affirmed their commitment to rein in health care costs, but the Department will need substantially more resources and must be prepared to attack the issue from multiple fronts to achieve this goal.

Where to Go from Here

Legislative and regulatory reforms could further expand the role ERISA can play and the impact it can have in reducing health plan spending. Below are three policy options that could move the needle to advance affordability:

• Policymakers could clarify when ERISA’s fiduciary duties apply to PBMs and TPAs, and identify examples of compensation schemes or other contracting and business practices that may violate these duties.
• Congress could amend ERISA to directly regulate more PBM, TPA, and other service provider conduct, both to enhance oversight over its transparency requirements and to prohibit or limit anticompetitive contracting behavior and other abusive business practices.
• Congress could provide the DOL with resources and authority to more actively support employers in their role as health care purchasers.

Acknowledgements

Authors: Christine H. Monahan, Karen Handorf, Kennah Watts

Published June 2026, with funding from the Peterson Center on Healthcare.