Association Plans Face Solvency Challenges

Regulators in California, Michigan and Oklahoma have found that they often end up having to rescue single-state MEWAs from financial problems, the Georgetown researchers report.

Regulators cope with MEWA crises by persuading licensed insurers to take over, pressing the professional and trade groups that back the MEWAs to make up for shortfalls, and asking the sponsoring groups to keep doctors and hospitals from going after patients to collect on claims that were supposed to be paid by the MEWAs, the researchers write.

To some extent, the researchers write, the participating employers are getting what they pay for.

“On one hand, weaker standards than the ones applicable to insurers may make the health insurance offered by associations less expensive,” the researchers write. “On the other hand, lower solvency requirements increase the risk of financial failure?. State and federal policymakers seeking to encourage new self-insured group purchasing arrangements must recognize that sacrificing solvency to save costs puts employers and workers at great risk.”