With health-insurance costs rising at a double-digit throttle, some Maine
employers have been exploring creative savings schemes. The latest mini-trend is
the multiple employer welfare arrangement, or MEWA.
The concept is not as complicated as the name sounds. It is an expansion of
self-insurance, where an employer sets up a trust, deposits money in it for
health-care purposes, and pays claims as they come. In a MEWA, a group of
employers get together for the same purpose.
There are three such
arrangements so far in Maine —the Maine Municipal Association, the Maine
Automobile Dealers Association, and the Maine Bankers Association. The bankers'
arrangement, just over three years old, was the first one formed.
"We've been very happy with the format of the MEWA," said Mark Walker, the
association's vice president. "When you're self-funded, there are some
administrative services that can be done less expensively or that aren't
needed."
Another advantage of a MEWA allows employers more say over what
benefits are covered, which may allow for greater cost savings than traditional
insurance packages.
These arrangements began as a response to tough economic
times. The state laws for MEWAs were put in place in 1993, but few employers
took interest then because managed health-care providers were just entering the
market and offering cut rates to gain market share.
As the economy soured
and prescription drugs remained expensive, managed planners raised premiums.
Health-insurance costs were soon soaring into double digits — with increases in
some years of as much as 20 percent.
"Things got so bad that the bankers,
and then the auto dealers, got together and said, 'We've got to look at
alternatives,' " said Bruce Gerrity, a lawyer with Preti Flaherty law
firm.
Gerrity so far holds a monopoly in Maine on the legal expertise in
setting up these arrangements for private employer groups.
The arrangements,
he said, remove a layer of bureaucracy and profit-making.
"If you run a MEWA, you're just trying to cover costs as per the requirements
of the Bureau of Insurance," he said.
The arrangements can also help
employers better understand and control health-care costs, though they may not
gain large savings.
"You can be creative on wellness programs," said Eric Chioppa, the insurance
bureau's deputy superintendent. "In some cases, employers feel they have more
control. But it's not that savings are going to be huge."
But fluctuating premium hikes will remain a bugbear even for those groups
participating in such an arrangement.
"We've done probably better than
average medical inflation for the state," said the bankers association's Mark
Walker. "We had one very good year, one bad, and one average year. In the first
year, we had zero (premium) increase. In the bad year, we paid more claims than
we anticipated — (the rate increase was) slightly more than 20 percent. It's
unpredictable to the extent that you might have large and expensive claims in
one year, and you might have just routine claims in another."
"Being a MEWA doesn't change (the fact of premium increases) at all," said
Stephen Gove, director of the Maine Municipal Association's employee health
trust. "Last year's increase (for the MMA) was 9 percent."
But even as
premiums remain hostage to unpredictable health costs, these arrangements'
biggest selling point so far is their cost-saving possibilities.
"The future
is bright because cost is exploding," said Gerrity. "And anything you can do to
control cost is going to be popular."
