Run the numbers: Would local Multiple Employer Welfare Arrangement help with health care costs? (letter)
July 2, 2018
Dear editor: Congratulations to Chris Romer for his noble suggestion of a Multiple Employer Welfare Arrangement (MEWA) to address health care costs in the high country ("Looking harder at health care solutions in state's high country," Chris Romer, Friday, June 29).
All forms of insurance, including health care insurance, are based on the "law of large numbers," whereby large numbers of healthy participants in an insurance plan enable the payment of many claims of the unhealthy, including large ones. The size of the group is critical to a plan's financial stability.
Are there enough potential participants in the proposed local MEWA to support it? I don't know the numbers, but I suspect that without the inclusion of the very largest employers, e.g. Vail Resorts, Eagle County, etc., and maybe even including them, the number of participants would not be sufficient to support the plan. And there is the problem of "adverse selection," whereby healthy people don't participate in the plan and unhealthy ones do. That was the problem that the failing ObamaCare mandatory enrollment rule attempted to address, without success.
In my personal corporate experience, when administration of the corporate health insurance plan was part of my responsibilities, a few very large, serious claims consumed more than 90 percent, sometimes more than 95 percent, of the total premium revenue — consider a few serious auto injuries, terminal illnesses, etc. Mr. Romer needs to run the numbers to determine if his proposal would work, and he might have. But that might be why the state folks are unenthused by his proposal.
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