N.J. health insurance bill off the fast track

July 21--Long before Obamacare, New Jersey pioneered laws that broadened access to health care for individuals and employees of small business regardless of age or medical history.

Now concerns that the broader access will be compromised by a new bill have caused the legislation's sponsors to consider last-minute changes after fast-tracking it through the Assembly. The bill, S-2220, would encourage small and midsized employers to band together into self-insured pools to provide employee health coverage.

Proponents of the bill won a 79-0 vote in the Assembly after arguing that the insurance pools, known as "Multiple Employer Welfare Arrangements," or MEWAs, would lower premiums and give strapped small businesses a new way to counter rising costs of coverage.

But a coalition of health care advocates said the pools could leave the elderly and sick paying big new premiums as private investors in the proposed groups walk off with profits. The MEWAs would also be at odds, they said, with the spirit of the Affordable Care Act as it seeks to draw more people into a larger, more cost-effective coverage pool.

They say the bill, which was pushed by Conner, Strong & Buckelew, a South Jersey insurance brokerage owned by Democratic leader George E. Norcross, appears more geared toward private interests than consumers.

"For a long time we have been ahead of the curve in New Jersey," said Linda Schwimmer of the non-partisan New Jersey Health Care Quality Institute. "But this bill, as written, is not good health care policy."

Tom Considine, the CEO of Meadowlands Hospital Medical Center in Secaucus, said he supports the bill because premium restrictions in New Jersey have tied the hands of innovators seeking creative ways to combat rising health care costs.

John V. Jacobi, a professor of health law and policy at Seton Hall Law School and former adviser to the state Public Advocate, said the little-publicized measure is fraught with potential pitfalls. He sees members of the new insurance pools facing huge premium increases if they get sick, and employers on the hook for millions in unpaid claims if a group goes bankrupt.

"The troubling thing is that we would be creating a shadow health-insurance system under the name of MEWAs that seeks an end run around state regulation,'' Jacobi said.

Signs surfaced late Friday afternoon that opponents' protests were being heard when one sponsor of the bill said he was exploring changes that might eliminate a provision allowing for private investment.

But key watchdog groups in New Jersey, including the AARP, said they would continue to press their concerns about the bill, which passed the Assembly on June 26 only to hit a roadblock in the Senate after key lawmakers raised questions.

State Sen. Joseph Vitale, D-Middlesex, said 13 or 14 Democrats in the caucus protested voting on an important piece of legislation they knew nothing about.

"These MEWAs have generally not had a good record in New Jersey or elsewhere," Vitale said. "But nobody knew that. Nobody really knew what was in that bill or where it came from."

A key sticking point for opponents is the provision that would allow private investors to buy into the employer insurance groups, and take profits in some circumstances. Even prominent backers of the legislation said allowing such investors would not only increase costs and risk to employers, but possibly violate federal law.

"The idea of reforming existing law to give employers more choices makes sense," said Annette Catino, CEO of QualCare, a health care administration firm that has successfully run one of New Jersey's handful of existing insurance pools. "But creating for-profit MEWAs makes no sense at all. Handing out underwriting profits only cuts into reserves available for claims and makes everything riskier."

In an interview with The Record on Friday, a leading sponsor of the legislation conceded that he was considering amending the bill to eliminate the possibility of private investment in newly formed employer insurance groups.

State Sen. Robert Singer, R-Ocean, said the change would require the Assembly to vote on the bill again when it reconvenes in September.

"In trying to get this bill done some things may have gotten in not exactly how we wanted," Singer said. "But the bottom line is that changing the law will make MEWAs more competitive in the marketplace and give small businesses more choice."

This month, Singer and a second sponsor of the legislation, Assemblyman Ronald Dancer, said that a Conner Strong partner and a lobbyist whose firm was hired by Conner Strong had called them to promote the bill. The partner, Joseph Buckelew, is a former Ocean County Republican chairman.

Singer said the firm's input was important because it already has broad experience running several health-insurance pools for local governments, which the new MEWAs would resemble. He also said he expected Conner Strong would seek to manage some of the new groups if the insurance pool bill passes.

Conner Strong Managing Director Joe DiBella, who oversees the firm's employee-benefits division, said Friday that he was not familiar with details of how the insurance pool legislation evolved in recent months.

DiBella, however, said the private-investment clause in the bill is not essential and would do nothing to undermine benefits the measure would bring. Chief among those, he said, would be giving choices to small employers in an era when they are diminishing.

He also said that concerns being raised by the bill's opponents are "lawfully and technically wrong." He said the much-repeated claims of opponents that the bill would eliminate restrictions on premiums to the detriment of the elderly are unfounded because those protections are part of federal law under the Affordable Care Act.

Under state law for many small employee groups, the maximum that elderly and ill individuals can be charged for premiums is twice what the youngest members pay. While the bill would eliminate that restriction, DiBella said, federal law allowing a 3-to-1 premium ratio would still be in effect.

"There would still be significant protections," he said.

A spokesman for the state Department of Banking and Insurance said the office does not comment on pending legislation.

Considine, of Meadowlands hospital, pointed out that insurance pools have existed in New Jersey for decades and have been hampered by regulations that promote "artificial restrictions over actuarial science." He said notable failures of New Jersey insurance pools in the past _ several groups went bankrupt and stuck employers with millions in unpaid claims _ could have been prevented if rates were allowed to match risks.

"The opponents of this bill are missing the boulevard for the sidewalk," he said. "We have an opportunity here to create a new tool for employers. We need to have more tools, not less."

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