Bill Aims to Expand Multiple-Employer Insurance, But Critics Remain Wary

Andrew Kitchenman | August 8, 2014 | Health Care
Possible compromise over MEWA bill would require smaller firms to continue to match state-mandated coverage

State Sen. Robert W. Singer (R-Monmouth and Ocean)
Proposed legislation that’s been both praised as a way to expand insurance options for small employers and criticized as a path to diluting consumer protections is the subject of negotiations that could reshape the bill.

The bill, S-2220 (A-3421), would revamp Multiple Employer Welfare Arrangements, or MEWAs.

It could see a vote as soon as August 18, according to state Sen. Robert W. Singer (R-Monmouth and Ocean), one of its sponsors, although state Sen. Joseph F. Vitale (D-Middlesex) said there’s no rush to consider the measure.

MEWAs allow small to medium-sized businesses to join together to negotiate and buy insurance in a self-funded insurance plan as an alternative to traditional commercial insurance.

Bill sponsors said the measure is meant to update state law to make it easier for MEWAs to form.

The bill “is allowing the smaller companies to buy at the same rate as the big guys do,” Singer said.

But some consumer advocates warn that it would allow some employers to bypass offering insurance services that are mandated by the state for commercial plans.

New Jersey toughened its regulations governing MEWAs in 2002, the year in which the New Jersey Coalition of Automotive Retailers MEWA became insolvent, leaving employees with $15 million in unpaid medical bills.

Only three MEWAs currently operate in the state, which business executives attribute to the barrier posed by the state regulations.

As the bill currently stands, it would allow investors to receive a share in a MEWA’s financial gains, but Singer said he is prepared to remove that provision.

But Vitale and consumer advocates have raised several other concerns, including the possibility that employers joining MEWAs would offer lesser coverage.

They have also said that the bill could weaken the federal insurance marketplace, because it would allow employers with younger, healthier workers to join together to form MEWAs – potentially leaving too many older, less-healthy workers to buy individual insurance on the marketplace, which would drive up marketplace premiums.

Linda Schwimmer, vice president of the New Jersey Health Care Quality Institute, has said that a similar pattern has appeared in states with less-stringent MEWA regulations that New Jersey, leading to escalating rates in the individual market.

The bill was moving swiftly through the Legislature, including a 79-0 vote in the Assembly, until Vitale raised these concerns with other senators.

Singer said he is prepared to offer a series of amendments in response to address points made by Vitale and others.

He said that the bill was never intended to harm anyone, but rather is designed to provide relief to small and medium-sized employers, which he said “are being stretched beyond belief” by rising healthcare costs.

Singer rejected the contention that the bill would lead to employers with younger, healthier workers banding together.

When asked about the suggestions by consumer advocates that the bill would weaken the federal insurance marketplace, Singer replied: “You mean the one that’s failing? If anybody believes that it is working, then I have a bridge to sell him.”

Singer is interested in offering an amendment that would require employers with between two and 100 workers to continue to offer the same coverage that the state requires for commercial plans.

He would exempt larger businesses, since other large businesses with self-funded plans don’t have to follow those state mandates.

But another amendment that Singer is planning would require a 90-day “grace period” for these large plans to inform employees of changes that could affect them.

“We’re all looking to making the bill better. Joe has given some valid concerns that we think we’ve answered,” Singer said, adding that they have together since Vitale joined the Senate in 1998. Singer joined the Senate in 1993.

Singer is the senior Republican on the Senate Health, Senior Citizens and Human Services Committee, which Vitale chairs.

State Sen. Joseph F. Vitale (D-Middlesex)
In July, Vitale described the bill as “just a bad piece of legislation.”
Yesterday, he said he has been talking with Singer about potential amendments, but hasn’t endorsed Singer’s proposals.

“There may very well be amendments that Senator Singer offers and there may be amendments that I offer, and we’ll see in the end which amendments will be supported by the Legislature,” Vitale said. “There’s been no final determination about what these amendments will look like, as far as I’m concerned.”

Vitale said he was still working on his proposals to amend the bill and gave details for only one of them yesterday: making the measure effective on Jan. 1, 2016, rather than the 60 days after its enactment under the current language.

“There should be no rush to get this done – there’s just too many questions and there are too many consequences to offering amendments and passing a bill that would have a significant impact on the existing market,” Vitale said.

But Vitale expressed concerns about leaving any workers without health benefits that they currently have under commercial insurance plans.

“Why should they lose the benefits that they already have?” Vitale asked.

State-mandated benefits include in-vitro fertilization, applied behavioral analysis and other treatments for children with autism, home treatment for those with hemophilia, and hearing aids for children younger than 15.

Bill critic Maura Collinsgru, the health policy advocate for New Jersey Citizen Action, acknowledged Singer’s willingness to address some concerns raised by consumer advocates. But she remains concerned about the impact on larger companies.

“There’s no reason to eliminate and roll back standards and protections that consumers now have,” Collinsgru said of those covered by commercial plans who could be moved into a MEWA.