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Lawmakers debate MEWA proposal and solvency protections as committee advances bill
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Summary
The committee advanced HB5378 to the floor after lengthy debate over association health plans (MEWAs). Supporters said pooling risk could lower premiums for small businesses and nonprofits; critics warned of insolvency risk and urged stronger reserve and trust provisions.
The Insurance and Real Estate Committee voted to send HB5378 forward after a protracted argument over whether self‑funded association plans (MEWAs) provide needed relief for small employers or pose unacceptable solvency risks.
Representative Meskers and other proponents said MEWAs create a way for small businesses and nonprofits to pool risk and obtain more affordable coverage. "This is an attempt to provide our small businesses with the opportunity to pool their risk, pool their resources, reduce their costs," Representative Meskers said, adding that proper oversight and stop‑loss insurance could mitigate risk.
Opponents warned of high‑profile MEWA collapses in other states. Senator Lesser cited a New Jersey failure and a reported exposure figure, pressing sponsors on whether a $4,000,000 reserve would be adequate. "In New Jersey the exposure was $10,000,000," he said; the chair and sponsors responded that the substitute language increases commissioner discretion over reserve levels, requires a trust and additional oversight and includes insurance for fiduciary entities.
Concern about preexisting conditions also animated the debate. Several members, including Senator Marks and Senator Lesser, said the bill must explicitly ensure no reinstatement of preexisting‑condition discrimination. Sponsors said they had written that protection into the substitute language: "The plan will not limit or exclude coverage for any individual by imposing a preexisting condition provision," the chair read into the record.
What to watch: Committee leaders agreed to refine technical solvency language with the Insurance Department and to produce clearer fiscal and actuarial analysis before final passage. The bill moves forward, but members on both sides signaled this is not the final draft.
Outcome: Motion to JFS passed; sponsors and the Insurance Department will continue work to tighten reserve, trust and oversight language.
Provenance: Discussion and vote recorded in transcript from SEG 689 through SEG 1990.
