I'm analyzing the section by section analysis of the Senate bill put out by the Democrats.Senate.gov. together with the bill itself. See
http://dpc.senate.gov/healthreformbill/healthbill05.pdf Various provisions relating to NOT allowing pooled purchasing strategies for the government's purchases of pharmaceuticals in certain areas have been discussed by others in other places.
What's interesting to me are provisions under Subtitle G "Additional Program Integrity Provisions" that make life very hazardous for Multiple Employer Welfare Arrangements or MEWAs.
MEWAs are defined by Investopedia.com as
a form of cooperative or pooled purchasing of health insurance policies by employers:"A multiple employer welfare arrangement is a good way for smaller employers to get group health and other insurance benefits for their employers. By pooling their contributions together, these smaller employers are better positioned to offer the best benefit packages from insurance companies due to economies of scale."
http://www.investopedia.com/terms/m/mewa.asp
The above sounds like a smart economic move to limit premium costs to me.
Also, I'd personally not heard of any great problems with MEWA abuse, nor have I heard of any significant problems at all, frankly, regarding MEWAs. So, the Senate bill decided a crackdown on abuse was necessary, adding an entire Subtitle on "Program Integrity Provisions" to this end, as described below by the Senate Democrats section by section analysis:
Subtitle G—Additional Program Integrity Provisions
Sec. 6601. Prohibition on false statements and representations. Employees and agents of multiple employer welfare arrangements (MEWAs) will be subject to criminal penalties if they provide false statements in marketing materials regarding a plan’s financial solvency, benefits, or regulatory status.
{...}
Sec. 6603. Development of model uniform report form. To facilitate consistent reporting by private health plans of suspected cases of fraud and abuse, a model uniform reporting form will be developed by the National Association of Insurance Commissioners, under the direction of the HHS Secretary.
Sec. 6604. Applicability of State law to combat fraud and abuse. The Department of Labor will adopt regulatory standards and/or issue orders to prevent fraudulent MEWAs from escaping liability for their actions under State law by claiming that State law enforcement is preempted by Federal law.
Sec. 6605. Enabling the Department of Labor to issue administrative summary cease and desist orders and summary seizures orders against plans in financially hazardous condition. The Department of Labor is authorized to issue “cease and desist” orders to temporarily shut down operations of plans conducting fraudulent activities or posing a serious threat to the public, until hearings can be completed. If it appears that a plan is in a financially hazardous condition, the agency may seize the plan’s assets.
Sec. 6606. MEWA plan registration with the Department of Labor. MEWAs will be required to file their Federal registration forms, and thereby be subject to government verification of their legitimacy, before enrolling anyone.
Sec. 6607. Permitting evidentiary privilege and confidential communications. Permits the Department of Labor to allow confidential communication among public officials relating to investigation of fraud and abuse.
Putting the above provisions together, of which all of these "integrity" provisions affect cooperative buying action by employers, we have the following plain language translation:
1. No cooperative buying of health insurance until the feds approve the "legitimacy" of the "MEWA" but they are not defining "legitimacy." (Section 6606)
2. Our discussions about fraud and abuse (which almost surely include the POTENTIAL therefore in an application for approval of "legitimacy") will be secret and confidential and not subject to the Freedom of Information Act. (Section 6607)
3. The Department of Labor can SUMMARILY enter an order to "shut down operations of plans conducting fraudulent activities" until such time as the Dept of Labor holds a hearing, instead of simply ordering those plans to cease and desist a particular "fraudulent activity". This means, without notice, a MEWA can be "nuked" and put out of business, pending trial at which time they may well be found innocent of any fraud. However, most businesses can not survive even a couple months' time shut down, and some people can't live a couple months without health care benefits. (Section 6605)
4. The Department of Labor will write up more laws (regulations) to insure that state laws also regulate MEWAs and that MEWAs don't escape liability under state law by a federal preemption defense - the feds surely don't intend to protect MEWAs. (Section 6604)
5. We command states to fill out the model form we design so that we can track MEWA compliance and possible fraud. (Section 6603)
6. If any MEWA makes any fraudulent statement about their program "benefits" it's not a cause of action in consumer protection or tort law, it's a federal CRIME. (Section 6601)
Do I approve of truly fraudulent MEWA statements and such? Heck, no.
What's objectionable is the swift and summary execution of pooled purchasing plans called MEWAs (pending trial) via summary cease and desist orders for mere allegations of totally undefined fraud, because this means the death penalty for any disfavored MEWA regardless of their innocence or guilt (few businesses or unhealthy individuals can survive such a summary shutdown of their plan for even a couple months).
How about summary execution of insurance companies for defrauding their insureds, to whom they owe a fiduciary duty, of promised benefits??!! NOT IN THE BILL, of course.
EXAMPLE APPLYING ABOVE STATUTES:
This could mean that the representation in marketing materials that
"MEWAs save the Average Employer 20% - Join Our MEWA Union/Cooperative Buying Plan TODAY" could be considered, based on confidential/secret discussions with Wellpoint or other insurance executives, to be "fraudulent" and the plan is shut down totally pending trial. At trial, it won't much matter if the allegation of fraud is true or not because the MEWAs dead and there's immunity for prosecutors. Even if the MEWA manages to survive this shutdown, the plan members and those considering joining any MEWA will have reason to know the special risks of MEWAs and there's nothing to stop a second shutdown in coming months or years.
on edit: The above sounds like a conspiracy of government, but we know things of this type happen (collusion with insurance executives) AND more importantly it wouldn't be a CRIMINAL conspiracy because it would be ENTIRELY LEGAL (once this bill is passed)My question is this: Isn't the bottom line here, given the harsh procedures and secret government discussions about them, not only that the public can't get quantity discounts on pharmaceuticals via government pooled buying arrangements, but that PRIVATE SECTOR EMPLOYERS ARE very chilled from any cooperative or pooled buying arrangements, which are the essence of what Multiple Employer Welfare Arrangements (MEWAs) do?? There's nothing to stop the government from transforming "chill" into the complete extinction of MEWAs if they play their cards correctly. Why haven't they trained their fire on insurance companies??
What other implications do you see here?
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