The move to revise state regulation of self-insured, multiple-employer health plans, or MEWAs, is being shelved until the fall while Trenton confronts a major stumbling block: whether to continue requiring MEWAs to cover state-mandated health benefits that other self-insured health plans outside the MEWA structure don’t have to offer.
Sen. Joseph F. Vitale (D-Woodbridge), chair of the Senate Health Committee, is leading the opposition to a MEWA bill sponsored by Sen. Robert W. Singer (R-Lakewood) that would exempt large MEWA employers with more than 100 workers from the state mandates. Right now, all MEWA employers, regardless of their size, must cover the mandates.
“I certainly don’t agree on the elimination of the mandates, and that may kill the bill,” Vitale said.
Some of New Jersey’s 30-plus mandates go beyond what federal law requires of self-insured plans, such as certain services for individuals with autism.
Generally, only fully-insured health plans are subject to the state mandates, while self-insured plans are not; MEWAs are the exception. Under current state law, all employers in a MEWA must cover state mandates, despite the fact that MEWAs are self-insured.
Singer’s bill, S2220, would exempt large MEWA employers from the mandates. The bill would not go into effect until Jan. 1, 2016, when the definition of a small employer in New Jersey changes from more than 50 to more than 100, to conform to the federal Affordable Care Act.
Vitale said he’s been meeting with supporters and opponents of Singer’s bill for several weeks, and remains adamant that MEWAs continue to cover state mandates.
Singer, meanwhile, said he will explore a potential compromise that could preserve the mandates while also achieving his goal of putting MEWAs on a level playing field with self-insured health plans that aren’t part of a MEWA.
Singer said he’s researching the legality of allowing MEWA employers, or their employees, to select particular mandates they want included in their plan, and pay an extra premium for that coverage.
“Let’s see if we can say, ‘OK, it will cost you (an additional premium) to have that additional coverage,’ ” Singer said. “That would solve the problem for us.”
He said he would want the law to regulate how much extra the MEWA could charge to cover a mandate.
“I don’t want this to be ridiculous. But if it’s something reasonable, we could say, ‘If you need those (mandates), you’ll purchase that and, if you don’t need it, you won’t purchase it.’ ”
Vitale argues that even with the mandates, MEWAs are an affordable option for mid-sized employers, which are the 100 to 300 employee range, who want to pool their members to lower their costs and manage their risk by banding together into a MEWA.
He said MEWAs save money because they aren’t subject to certain state insurance taxes and can compete on administrative efficiency by negotiating favorable contracts with health care providers.
Vitale said he’s been told by actuaries that the state’s mandates account for between 5 percent and 6 percent of the insurance premium.
“That is a pretty good deal, particularly let’s say if you become a hemophiliac or your child is born with autism or another developmental disability — you are now able to afford care for yourself or your child,” he said.
Singer said he is not an actuary and doesn’t know how much the mandates contribute to the average insurance premium. But he pointed out that given the high cost of health insurance, even 5 percent can be significant. He said his state health insurance premium is about $19,000 a year. Five percent of that is $950.
“That isn’t peanuts,” Singer said.
He said large employers that self-insure without a MEWA don’t have to cover the mandates and “we want to make MEWAs competitive with large employers.”
Vitale said, “I’ve been meeting with the supporters of this legislation for nearly six weeks and I will continue to meet with them.” In a few weeks, he said, he will offer new amendments “and just generally continue an open dialogue.”
But, Vitale said, “In the end, if mandates are still something that they want to eliminate — the mandates that we all voted for and supported over the years — then there will be an entirely different outcome.”
Singer has recently agreed to drop a controversial provision in an earlier version of his bill that would have allowed outside investors to fund the creation of new MEWAs and then share in the profits from successful MEWAs. The current version preserves a provision of the existing law that the most expensive premium charge to a MEWA member can’t be more than twice that of the least expensive premium.
RELATED: Singer holding off on previously announced amendment of bill to regulate MEWAs
Singer said the federal ACA requires a ratio of no more than three to one, and legislators will consider changing state law to follow the ACA.
Among the advocates to revise the MEWA law is the insurance brokerage firm Conner Strong & Buckelew, whose chairman is South Jersey Democratic Party power broker George Norcross.
Conner Strong spokesman Dan Fee said: "Although the legislation is not yet final, in principle, Conner Strong & Buckelew supports efforts to increase competition in the marketplace and options for employers. The company will continue to monitor the legislation and make a determination about whether it presents an opportunity for the firm and its clients as it progresses."
Singer said it will probably be October before a new version of the bill comes before the legislature. And since the bill would not go into effect until Jan. 1, 2016, “there is no rush.”
Vitale said: “If the proponents of the law continue to advocate for the elimination of certain health care mandates, that doesn’t bode well for the legislation. I certainly won’t support that and neither will many of my colleagues, who over the years have either sponsored or voted for mandates that for many people are a matter of life or death.”
A coalition of health care advocates, including New Jersey Citizen Action and AARP, have come out against the bill’s provision to scale back on the mandates.
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Vitale said in the next couple of weeks he will propose revisions to Singer’s amended version of the bill, and propose his own amendments: “I won’t do it until I have met with the other side and we understand each other and do it respectfully.” He said there remains language in the bill that he wants changed that could effectively reducing access to the mandates for the small, less than 100 employers.
Michael Egenton, senior vice president, government relations for the state Chamber of Commerce, said the chamber will be neutral on the bill until a final version emerges from the current negotiations.
He said the high cost of health care “is a pressing issue that keeps our members up at night.”
And he said employers are interested in MEWAs as a more affordable option.
“The MEWAs are on the radar for our members, but we want to see where the discussion goes and see the details of the negotiations that go on between Chairman Vitale and Senator Singer,” Egenton said.
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