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Vitale offers opposition to MEWAs bill before vote

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State Sen. Joseph F. Vitale (D-Woodbridge) told NJBIZ he opposes a bill to allow outside investors to finance and profit from multiemployer, self-insured health plans.

The bill, S2220, set for a vote by the full Senate on Monday afternoon following unanimous approval last week in the Assembly, would change the rules governing “multiemployer welfare associations” or MEWAs.

Vitale, the chair of Senate Health Committee, said current law requires that any excess premiums collected by a MEWA have to either be returned to the members or used to lower their premiums in future years.  The new legislation allows outside investors to put up the cash the MEWA uses to pay claims and “any excess premiums would go back to that third party.”

Vitale said the third party, who may be a professional health plan administrator, is already compensated for administering the plan.

“This would be an additional profit,” he said. “They (the third party) are already compensated for being administrators of the plan. This would allow them to keep any excess premium.”

Vitale said the new MEWA legislation would also do away with a rule about the spread between the highest and the lowest premiums paid by members of a MEWA.

Currently, member premiums vary depending on age and geography, but the highest rate can’t be more twice the lowest rate.

Vitale said the legislation “would allow for an unlimited ratio — so it could be six to one, four to one or whatever.” 

Asked why the MEWA legislation appears to be moving through the Legislature without much opposition, Vitale said: “If you don’t ask the right questions you won’t get the right answers, so it is likely the right questions were never asked.”

Supporters argue the changes will encourage the creation of more MEWAs and thus provide more choice to employers looking for ways to provide health coverage to their employees. Supporters include the managed health care company QualCare, which operates one of the largest MEWAs in the state, founded a decade ago which now has 14,000 members. QualCare has argued that the Affordable Care Act provide significant federal oversight on self-funded health plans and MEWAs are subject to those new regulations.


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