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MEWAs bill pulled from Senate

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State Sen. Joseph F. Vitale (D-Woodbridge) said a bill he opposed that would have let outside investors fund new multiemployer health plans and share in their profits was pulled from consideration by the Senate just before its voting session Monday.

Vitale, who chairs the Senate health committee, said the bill, S2220, came up for discussion at the Senate Democratic caucus Monday afternoon prior to the full Senate voting session.

“There wasn’t a majority of Democrats willing to vote for it in its current form, so the bill was held,” he said.

The Assembly version of the bill had passed that house unanimously last week, but Vitale said, “Since there aren’t a majority of Senate Democrats willing to support the bill, it’s unlikely to go forward for a full vote.”

RELATED: Vitale offers opposition to MEWAs bill before vote

The bill would have changed the rules for “multiemployer welfare associations” or MEWAs, in which several employers join together to create a self-funded health plan.

Vitale said he questioned a provision of the bill that would allow third party investors to finance the creation of a MEWA and then share in the excess surplus that might result is the MEWA is successful. And he also questioned another provision that would have placed no limits on the variation in premiums paid by different members of the MEWA, whose premiums would vary by age and geography.

Under current law, the most expensive premium paid by a member of a MEWA can’t be more than twice the least expensive premium.

“We already have a law that established MEWAs and the regulations that govern them and if there are ideas to strengthen them, to make them more attractive and more effective, I’d be willing to listen to those ideas,” Vitale said. “But this bill doesn’t accomplish those goals.”

Seton Hall Law School Professor John Jacobi also raised questions about the MEWA bill, which he said would have significantly changed the current system.

He said by allowing the employer to partner with a private funder to set up a reserve fund for the MEWA, with the private funder having the ability to extract profits based on underwriting activity, “you are essentially creating an insurance company without becoming licensed.  I don’t understand how this is a  MEWA any longer if it is no longer being run by the employers for the benefit of their employees.”

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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