Multiple Employer Arrangements: Another Piece of a Puzzle, Analysis of M-1 Filings

Journal of Insurance Regulation - Fall 2004
Vol. 23, No. 1
Fall 2004
Kofman, M., Bangit, E., and K. Lucia
PP. 63-88

Many employers access and finance health coverage through a multiple employer arrangement (MEWA).  However, in the past 30 years, such arrangements have had a troubled history, with financial instability.  Since 2000, four MEWAs have become insolvent, leaving 66,000 people without health insurance and with an estimated $48 million in medical claims.  In some cases, multiple employer arrangements have either been victims of fraud or were established for fraudulent purposes by unscrupulous individulas.  Most recently between 2000 and 2002, 144 illegal entities selling coverage primarily through MEWAs left 200,000 policyholders with over $252 million in unpaid medical bills.  In 1996, the U.S. Congress empowered the U.S. Department of Labor to require MEWAs to register with the federal government.  Some observers believed that the registration requirement would help both federal and state oversight efforts. 

This article is a result of a first-of-its-kind study in the nation of the federal government's registration requirement for MEWAs.  it describes the registration requirement, discusses ways it could be improved, and provides and analysis of the MEWA registration forms filed with teh federal government in 2003. 

We estimate that approximately 600 MEWAs have registered with the federal government and they operate in every state, including the District of Columbia.  Registered MEWAs cover approximately five million people.  Over one third of covered individuals are in self-insured MEWAs.  THe article includes state-by-state analysis of MEWAs and their coverage.  We conclude that the federal government should improve its enforcement effots and develop more effective oversight to better protect consumers covered by these MEWAs. 

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