Vail Valley Partnership may have an answer to rising health insurance costs
More about MEWAs
The Investopedia website has a fairly concise explanation of what Multiple Employer Welfare Arrangements do.
EAGLE COUNTY — The cost of health insurance just keeps going up, especially for those who buy their own policies. That makes some of the nation’s most expensive insurance even more costly. The Vail Valley Partnership believes there’s an answer.
Partnership CEO Chris Romer is currently pushing an idea for something called Multiple Employer Welfare Arrangements. As the name implies, these arrangements bring businesses together in a form of self-insurance for the group.
Those groups negotiate with both care providers and insurance companies.
The group buys would, in theory, provide cost savings for business owners. Providers would get more patients. Romer acknowledged that the benefits for insurance companies aren’t as clear.
“It’s a win/win/draw,” Romer said.
The multiple employer pools are used in several other states, including Wyoming. In Casper, Brad Johnson owns Covenant Insurance Group. That company administers several groups. One, the Wyoming Chambers Health Benefit Plan, is now approaching its 15th year.
Johnson said many of the plans he’s aware of have now gone through the past four renewal cycles with no rate changes.
On the other hand, Johnson said the groups can have problems.
“Many are started on a whim and a prayer,” Johnson said. “The issue is (getting) enough critical mass to get them up running and self-sustaining.”
Fraud can be a problem, too, Johnson said.
Johnson noted that in Washington state, roughly 400,000 people are covered under association plans.
But, Johnson said, a state’s division of insurance has to support the group plans.
State support lacking
Which leads to Colorado. While Romer and other residents are ready to jump into the group business, Colorado Insurance Commissioner Mike Conway said he and his agency have strong reservations.
The primary problem, Conway, said, is that many groups that pre-date the 2010 federal Affordable Care Act can exclude members with pre-existing conditions.
Conway said a federal rule was just issued that may change the rules regarding the regulation of group arrangements, but added that it’s unclear whether new groups could still exclude people with pre-existing conditions.
Conway said another official concern is the possibility of fraud.
Johnson said that’s why it’s essential to get the right people to run the groups.
“There needs to be regulatory oversight,” Johnson said. “They need to be run correctly.”
State Sen. Kerry Donovan, an Eagle County Democrat, said she’s been talking with both local and state officials to try to find solutions for the high cost of insurance in the mountains.
Donovan said she hasn’t yet decided to support or oppose the idea for the group arrangements, but has been working on getting the Division of Insurance to provide a “full and fair consideration.”
Donovan noted that she’s sponsored or co-sponsored several health care bills during her four years in the Colorado Legislature. None have passed.
“It’s critical we start looking for any solution (to high costs),” Donovan said. “But it won’t come from the Legislature until we have different leadership.”
Donovan said she sees herself trying to serve as a mediator between state and local interests.
“We at least need to make the dialog continue,” she said. “We can’t just say ‘No, we can’t.’”
Finding middle ground
Conway said he’s open to new ideas, adding that the division hasn’t seen a formal proposal to create a group in Eagle County.
Romer said he believes the state is opposed to the group idea. Romer also believes such a group in Eagle County could be successful.
So does Vail Health CEO Doris Kirchner. In a recent interview, Kirchner said she and other hospital officials have been talking to Romer and others about the group arrangements and would like to learn more.
Romer acknowledged that the first few years of a group can be a risk.
“The state tells you these are potentially insolvent with a catastrophic claim,” Romer said. Given that an organ transplant can cost multiple millions of dollars, one of those could be disastrous for a group.
“In year one, a kidney transplant will go to reinsurance, then everyone raises rates and we’re back to square one,” he said. “I don’t discount that risk.”
Ultimately, Romer said it’s time to stop talking and start acting.
“We’ve been meeting and talking for years, and nothing has happened,” he said. “We have a solution. Is it perfect? Probably not.”
Still, Romer added, group arrangements can work with as few as 500 participants.
“We think we could have 3,000 (participants) in year one, and 7,500 in year two.”
But state officials have to be willing to take a risk, too.
“It really has to be a cooperative effort by everyone involved in this issue,” Donovan said. “We need to have the direct goal of lowering the cost of insurance.”
Vail Daily Business Editor Scott Miller can be reached at email@example.com and 970-748-2930.