Sen. Robert W. Singer (R-Lakewood) announced Monday he's holding off on his planned afternoon introduction of an amended version of his bill, S2220, which aims to encourage more employers to join together to create more affordable, self-insured health plans.
Sen. Joseph F. Vitale (D-Woodbridge), chair of the Senate Health Committee, is opposed to the Singer bill, which on Monday also drew opposition from a coalition of consumer and health advocates.
A spokesperson for Singer said the amendments were held because “I believe they are still trying to iron out some of the issues. Hopefully the amendments will be ready to go next time we are in Trenton. We do not have the fall schedule as of yet.”
However, there is support for Singer’s efforts to make multiple employer welfare associations, or MEWAs, more accessible to employers.
Christine Stearns, vice president of the New Jersey Business & Industry Association, said: “MEWAs are an important health care coverage option for employers in New Jersey. The law needs to be revised and updated to ensure that it strikes an appropriate balance between oversight and flexibility.”
Currently, all employers in MEWAs must cover more than 30 state-mandated health benefits, including certain autism services. MEWAs fall under the mandates even though they are self-insured; outside the MEWAs, self-insured plans are not subject to the state mandates but must follow federal health plan rules, including requirements of the Affordable Care Act.
Singer’s amendments would require small employers who form MEWAs to provide the state mandates, while large employers would be exempt. While the state now defines a small employer as under 50 workers, Singer’s bill would require MEWA employers with fewer than 100 workers to cover the state mandates; in 2016, the small employer threshold will rise to 100 under the ACA.
Singer said his bill puts mid-sized employers, which are those with 100 or more workers, who create MEWAs on a level playing field with large employers with thousands of workers, who now routinely self-insure their health plans on their own, without using a MEWA.
A level playing field could encourage more mid-sized employers to create MEWAs, where they can more easily pool their employees and share the risk. Larger employers have long turned to self-insurance to get more control over the cost of their medical claims — and, currently, the majority of New Jerseyans with health coverage from their employers are in self-insured plans.
RELATED: Singer plans to regulate MEWAs by amending his previous bill
Maura Collinsgru, health policy director for New Jersey Citizen Action, said thousands of New Jerseyans will lose coverage provided by the state mandates if large employers leave the fully-insured market and join the self-insured MEWA system, where they will not be required to cover those mandates.
If more of those employers migrate to MEWAs, their workers will lose access to state mandates that go beyond the essential health benefits mandated by the ACA, such as the autism mandate, Collinsgru said.
“This would be a terrible loss for consumers,” she said.
By one estimate, in 2012 there were 975,000 New Jerseyans enrolled in fully insured, large employer groups, which are those with more than 50 workers.
The state mandates apply to fully insured plans, but there are variations depending on the size of the employee group. The autism mandate, for example, applies broadly to the 30 percent of New Jersey residents who are covered by fully insured plans. The state mandate requiring coverage for infertility treatments, for example, applies just to the large, fully insured group market, or about 10 percent of New Jersey residents
Stearns of the NJBIA noted that enrollment has declined in the state’s small group market, for employers with fewer than 50 workers. Premiums have steadily risen in the small group market, where coverage is fully insured and plans have to include most of the state-mandated benefits.
Stearns cited figures from the state Department of Banking and Insurance that enrollment in the small group market declined from 850,615 in the fourth quarter of 2008 to 647,374 in the fourth quarter of 2013. She said the recession played a role in the decline, and it’s not known how much of the decline is the result of employers reducing their workforce or going out of business, and how many dropped out because they could no longer afford the premiums in the small group market.
“Certainly a difficult economy played a role, but small businesses are losing their ability to afford health insurance,” Stearns said. “Small employers are evaluating all their coverage options to find the best value for their families and their employees.”
One of the largest MEWAs in the state, the Affiliated Physicians & Employers Health Plan, has a membership of about 1,200 employers and covers their 22,000 employees and family. Dawn Wright is vice president of QualCare, which administers the MEWA. She said the MEWA covers the state mandates and it would continue to do so even if the state passes legislation that exempt large MEWA employers from those mandates.
Wright said QualCare supports Singer’s efforts to put MEWAs on a level playing field with self-insured plans that operate outside the MEWA framework. She noted that absent the state mandates, MEWAs and other self-insured plans would continue to be subject to the ACA, which requires plans to cover a list of essential health benefits; not charge co-pays for preventive care; cover at least 60 percent of the medical costs; and limit an individual’s out-of-pocket medical costs to $6,350.
Wright said, “it makes sense to allow some of these smaller employers, with 100 to 250 or 300, to be able to join together to share their risk. That is the ultimate goal of a MEWA, to allow employers to come together and share in the risk.”
While mid-sized employers can self-insure on their own right now, and not be subject to the state mandates, Wright said this is riskier for a mid-size employer with several hundred employees than for a big employer with thousands of workers. The MEWA provides smaller employers with the scale of a large employer.
Ray Castro, senior policy analyst for New Jersey Policy Perspective, is among the critics of Singer’s bill, which he said “would reduce the number of state-mandated health benefits a large employer must provide in other to reduce the employer’s cost, but, unfortunately, that simply shifts them to the employee.”
“If anything, you would think a large employer would have to provide better coverage given their larger economy of scale,” he said. “New Jersey should be moving in a direction that promotes greater consistency and quality in health coverage, not less.”
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The coalition of groups opposing the Singer bill includes: New Jersey Citizen Action, AARP, Communication Workers of America, Health Professionals and Allied Employees, New Jersey Association of Mental Health and Addiction Agencies, National Council on Alcoholism and Drug Dependence, New Jersey Policy Perspective, New Jersey Appleseed Public Interest Law Center, NJ Main Street Alliance, La Casa de Don Pedro, AFSCME NJ Council 1, Mental Health Association in New Jersey, Unitarian Universalist Legislative Ministry of NJ, the Statewide Parent Advocacy Network, Family Voices of NJ and the South Jersey NOW, Alice Paul Chapter.
Ed Martone, policy analyst for the National Council on Alcoholism and Drug Dependence NJ, said: “By exempting certain employers from the requirement to provide these mandated services, this legislation would weaken consumer access to substance use disorder treatment. Any roll-back of coverage guarantees for these essential services renders the years of struggling to secure parity of physical and behavioral healthcare meaningless.”
Debra L. Wentz, CEO of New Jersey Association of Mental Health and Addiction Agencies, agreed. She stated: “We have worked hard to eliminate barriers to accessing mental health and substance use treatment services. Reducing coverage standards will result in more limited access to care for those who need behavioral health services and will have a negative impact on them, their families and their communities. We cannot afford to turn back on the progress we have made in increasing access to care.”