This paper is a history of the health policy results of the Employee Retirement and Income Security Act of 1974, particularly section 514, which preempts state laws “which relate to any employee benefit plan” but permits states to continue to regulate the business of insurance. This history exemplifies how health policy is often made outside conventional arenas. On the basis of published primary sources and interviews with a number of key participants, the paper describes how interest groups which rarely act together coalesced to create and sustain semipreemption and its effects on state and federal health policy. The paper concludes with an asessment of recent state legislative efforts to address the problems created by ERISA semi-preemption. The ironical results of semipreemption occurred because of the absence of a coalition of interest groups that was sufficiently strong to resolve the fundamental questions raised by our commitment to linking health insurance to employment.

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