A bill that was promoted as a way to increase health-insurance options for small businesses is meeting fierce opposition from consumer advocates who see it as a threat to the new federal health insurance marketplace in the state.
The legislation,/A-3421, would make it easier to launch Multiple Employer Welfare Arrangements (MEWAs), which allow groups of employers to self-insure rather than buy commercial plans from insurers.
The billwhen it advanced rapidly through the state Assembly after being introduced on June 16, culminating in that body approving it by a 79-0 vote two weeks later.
But when consumer advocates became aware of details of the legislation, they united to oppose a Senate vote on the measure.
Opponents include New Jersey Citizen Action and national healthcare advocacy organization Community Catalyst; Jersey City Mayor Steven Fulop; and representatives of two labor unions, the Health Professionals and Allied Employees and Communications Workers of America Local 1032.
CWA staff representative Dudley Burdge said that one potential beneficiary of expanding MEWAs is Philadelphia-based insurer Conner Strong & Buckelew, whose executive chairman is South Jersey powerbroker George Norcross.
That’s because MEWAs could create opportunity for insurance brokers like Conner Strong. The Record newspaper reportedto support the bill.
Foes cite several specific objections to the bill:
It could enable insurance plans to circumvent protections guaranteed by the Affordable Care Act, since MEWAs don’t have to provide the same set of essential benefits required of commercial plans. While the ACA reshaped the requirements for commercial insurance plans, companies that self-insure or are in MEWAs are largely exempt.
It could allow MEWAs to “cherry-pick” companies with younger, healthier workers.
It could destabilize the federal insurance marketplace by encouraging young people who would otherwise buy marketplace plans to buy MEWA insurance, making ACA plans more expensive for older people.
“These insurance arrangements are often a bad deal for consumers, and in this case, consumers are not getting protections that are promised them” under the ACA, said Christine Barber, senior policy analyst for Community Catalyst.
The coalition of MEWA foes took part in a Citizen Action-organized telephone press conference held yesterday, shortly before the state Senate held a voting session. While senators had discussed voting on the bill, it was never added to the agenda, and opponents said they planned to meet with senators to discuss their concerns.
The bill would increase the amount members must deposit in order to launch a MEWA. It would allow investors or financial institutions to bankroll those deposits and receive a share of underwriting gains. The legislation would also change basis for requiring the employer members to make a payment, or assessment – basing it on whether the employer operated at a loss the previous year rather than whether an actuary determines that it’s necessary.
There are only three active MEWAs in the state: the Association Master Trust MEWA, which includes members of 16 business associations; the Affiliated Physicians and Employers Health Plan, which offers access to healthcare providers through the provider-owned insurer QualCare Inc.; and a MEWA that was formed with the backing of Meadowlands Hospital, but which is now legally separate from the hospital.
Supporters of the bill said the changes amounted to updating state regulations and that there were sufficient protections to prevent MEWAs from becoming insolvent. That’s a sensitive issue in New Jersey, where the New Jersey Coalition of Automotive Retailers MEWA went belly-up in 2002, leaving employees on the hook for $15 million in unpaid medical bills. Bill opponents said encouraging MEWAs raises the risk of similar situations in the future.
But the biggest concern cited by opponents is the ability under the bill for MEWAs to charge members different amounts depending on the age of their workers. They say this will undermine a central feature of the ACA: the ban on charging higher rates for people with pre-existing conditions, who generally tend to be older workers.
“If MEWAs expand, they will pull the healthy people out” of the marketplace, threatening its viability, said Dena Mottola Jaborska, director of organizing and strategic program development for Citizen Action.
MEWAs, along with standard self-insurance plans frequently used by large employers, do not have to follow most of ACA requirements and are instead governed by other federal laws.
Fulop said he was concerned with the “11th-hour” push to pass the bill, after having encouraged Jersey City residents to buy marketplace plans.
“It’s concerning as well that some people would sign their name to something that has the potential to undermine the ACA,” Fulop said.
New Jersey Citizen Action health policy advocate Maura Collinsgru said the bill would mean “that New Jersey is reversing course” after historically setting higher standards for health insurance than other states. “This lowers the bar,” she said.
Fulop said he only became aware of the bill yesterday morning and would have reached out to Assembly members before they voted on it if he had known sooner. Other opponents said the bill came in “under the radar” of watchdogs amid the rush of bills before the June 30 state budget deadline.