New Jersey recently passed legislation requiring health insurers to cover unmarried dependents, or grown children without access to other group insurance, on their parents’ plans up to age 30. According to an article in Tuesday’s Wall Street Journal, this is a growing phenomenon, with other states such as Colorado and New Mexico having passed similar bills. Given that young adults are more likely to be uninsured than any other age group, this is a smart—if small—idea. Time will tell if these types of initiatives will have even a marginal impact, but what is particularly interesting about this phenomenon, particularly in light of the emerging debate here at TPM Café about the wisdom of employer mandates, is that these states are using a lever they have—their authority to regulate insurance companies, which is much stronger than their authority over employer benefits—in an effort to expand coverage.

Putting aside for a moment whether mandates on employers to provide health insurance as an employee benefit are a good idea, they are very hard to do at the state level because of ERISA constraints (the federal legislation that relates to employer health benefits). To circumvent these constraints, states can tax employers and use that money to set up a fund that is in turn used to subsidize health insurance (sort of like Maryland’s Fair Share legislation), but states cannot mandate outright that employers offer health insurance as an employee benefit. Lacking the authority to require employers to provide benefits to young workers, states can pass legislation like the New Jersey bill, which compels insurers to include them on their parents’ policies. Of course, this type of bill probably won’t have much of an impact, and applies to only a subset of the uninsured, so it certainly serves to highlight how states are constrained.

Whether or not states can compel employers to provide certain benefits, there is of course a larger debate about whether employers are even the best delivery mechanism for health insurance at all. For those of us who think that they ultimately are not, a properly structured employer mandate at the national level that requires employers to provide coverage or contribute towards its cost could be, somewhat counter intuitively, a reasonable way to begin the move away from the employment-based system.

Employer play-or-pay mandates are typically presented as an incentive to get employers to provide coverage (those who don’t offer it are punished with a tax). But if the amount of the tax is lower than the cost of providing health insurance, over time, more and more employers would probably choose to pay it rather than to provide coverage as premiums continue to rise, thus hastening the demise of the employer-based system.

If this happens, setting up a strong, functioning alternative pooling mechanism other than the individual market will be crucial; giving people some money and sending them off on their own would be worse than where we are now. The federal government would probably also need to subsidize the cost of premiums with revenue in excess of that provided through the employer tax, and eventually, policymakers may want to revisit whether another funding stream makes more sense. Because of the sheer size of such an endeavor, it really needs to be undertaken at the national level. Analytically, this is where I think many people turn to the individual mandate as the new glue that holds people in the system.

We’re a long way from this type of conversation among our national leaders, so it’s good to see states doing what they can. There is much states can do (and states like Massachusetts, that start much farther ahead of other states, can come close to universal coverage), and I hope they will, but ultimately, this is a conversation we must have at the national level.