State Sen. Robert W. Singer (R-Lakewood) said he will introduce this week an amended version of his bill that seeks to encourage employers to join together to create affordable, self-insured health plans.
Singer said he’s prepared to compromise in order to update state law regulating “multi-employer welfare associations” or MEWAs, but the changes he’s proposing may not satisfy some opponents.
Singer said his bill, S2220, aims to put MEWAs on an even playing field with self-insured health plans that very large employers already routinely create on their own, without forming a MEWA.
Currently under New Jersey law, a self-insured employer in a MEWA, regardless of size, must cover more than 30 state mandated health benefits — just as if they were a fully-insured employer in the state-regulated, small group health insurance market for employers with fewer than 50 workers.
Under Singer’s bill, small employers in MEWAs would still be bound by the state mandates; larger MEWA employers would be exempt from state mandates, but would still be governed by federal health care laws, just like other self-insured employers. Singer argued this would allow MEWAs, which are self-insured, to compete on a level playing field with other self-insured plans that operate outside the MEWA structure.
Currently, the definition of small employer is less than 50 workers, and in 2016 that will change to 100 to conform to the federal Affordable Care Act.
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MEWAs, like other self-insured health plans, would still come under federal laws, including the ACA. The ACA mandates that all health plans, whether insured or self-insured, cover a menu of essential health benefits; pay at least 60 percent of medical expenses; provide preventive care without copays; and cap the individual’s out-of-pocket health care expenses at $6,350 a year.
Singer said his bill “will allow small to medium size companies to come together and form a MEWA and purchase coverage at a better rate — just like the big guys. An employer with 110 employees will be able to buy at the same rate as the employer of 5,000.”
State Sen. Joseph F. Vitale (D-Woodbridge), chair of the Senate Health Committee, said he does not support Singer’s bill because it would exempt larger employers in a MEWA from the state mandates, which in some cases are more extensive than federal law. As an example, Vitale cited the state mandate requiring health insurers to cover specialized services for individuals with autism and other developmental disabilities.
Vitale said Singer’s bill “eliminate(s) mandated health benefits and I can’t support that.”
In a statement, Singer said his revised bill is “intended to ensure that small groups in New Jersey retain the small employer protections they have now.” He said his bill does this by continuing to apply state mandates to small employers in a MEWA — defined as those under 50 employees currently, and under 100 beginning in 2016.
Singer said, “The main elements of the bill remain the same — to stimulate MEWAs as a way for middle-sized companies to band together and enjoy the economies of scale that today only big companies can get — and the bill places MEWAs on the same equal footing as the big insurance companies that today largely dominate the market. More competition is good for businesses and consumers.”
Vitale, however, said he sees no need to change the current MEWA law, which provides that “whether you are a large or small group, you get all the state mandated health benefits.” He said he’s willing to tweak the MEWA law to improve it but “removing consumer protections and health care benefits is not an improvement.”
Singer’s revisions also eliminate a controversial provision in the original version that would have allowed outside investors to provide funds to create MEWAs, then share in profits generated by successful MEWAs.
Singer said, “We were looking to outside investors to find new capital to help the MEWA form.”
Opponents got the impression that “having outside investors be able to take profits out was going to weaken the MEWA. But it was never our intent that there would be people getting rich on this,” he said.
And the bill would also retain a provision of current MEWA law that the most expensive premium charged to a MEWA member can’t be more than twice that of the least expensive premium.
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