Commerce Committee Report – Week 12, 2018

SF 2349 – MEWAs and health benefit plans;
HF 2239 – Insurance Division regulated industries technical update. 



SF 2349 relates to association health plans, a type of multiple employer welfare arrangement (MEWA), established by bona fide associations of employers. The arrangement is established by a trade, industry or professional association of employers that has a constitution or by-laws, is organized and maintained in good faith with membership stability. In the 1980s, there were significant problems with MEWAs across the country. Many were not properly capitalized and failed, leaving people with millions of dollars in unpaid health care claims. As a result, Congress gave states authority to regulate MEWAs. Under current Iowa law, no new MEWAs can be created. The only ones that exist are run by the Iowa Bankers Association and the Iowa Petroleum Marketers. The U.S. Department of Labor is in a lengthy rule-making and public-comment period on a proposal to modify MEWAs. The bill loosens Iowa law and directs the Iowa Insurance Commissioner to promulgate rules for creation of association health plans consistent with U.S. Department of Labor regulations. Some believe that, while MEWA options are promising for Iowa, it would be prudent to wait until federal rules and guidelines are complete.

The House passed the bill 69-30 with an amendment that incorporates SF 2329, relating to health benefit plans, which passed the Senate 40-9 and was on the House Unfinished Business Calendar. The amendment allows certain agricultural organizations to offer their members “health benefit plans” and requires any plan be provided through a self-funded arrangement and administered by a domestic third-party administrator that holds a certificate of registration from the Iowa Insurance Commissioner. This allows those who do not qualify for a health insurance subsidy to join the Iowa Farm Bureau and, as a benefit of membership, buy health coverage plans that are not ACA-compliant. The third-party administrator must have provided more than 10 consecutive years of previous health care administrative services for the agricultural organization, which limits this to health plans provided through Wellmark Blue Cross and Blue Shield. The plans “shall be deemed to not be insurance” and so are not subject to state and federal insurance regulations. One concern is that Farm Bureau and Wellmark could cherry-pick younger, healthier customers, leaving less healthy and older Iowans in the individual market, where Medica is the only provider in Iowa. This could further increase Medica premiums and further destabilize Iowa’s individual health insurance market.
[3/27: Concur 37-11 (No: Bisignano, Bolkcom, Boulton, Dotzler, Dvorsky, Hogg, Jochum, Lykam, McCoy, Petersen, Quirmbach; Absent: Bertrand)]


HF 2239 (SF 2275) update the Securities and Regulated Industries Bureau at the Iowa Insurance Division. It removes an unnecessary Iowa Code reference to NASDAQ, the national securities exchange registered under the Securities and Exchange Act of 1934; aligns Iowa’s crowdfunding portal law to reflect rule changes at the federal level; and updates references to the Financial Industry Regulatory Authority in Iowa Code covering viatical settlements.

The bill also amends Iowa Code (523A.207) that covers pre-need funeral arrangements. Changes will provide consumer protections and simplifies the reporting process to make it more workable for businesses. Currently, a CPA report is required when there is the sale of a business or the assets of a business involving pre-need funeral arrangements. Under the legislation, the Insurance Division can waive the report for good cause, and an agreed-upon procedures methodology could satisfy the requirement instead. The bill passed the House 98-0.
[3/26: 47-0 (Absent: Bertrand, Zumbach)]