States Need More Department of Labor Help To Regulate Multiple Employer Welfare Arrangements and Correct Problems

GAO discussed its review of multiple employer welfare arrangements (MEWA). GAO noted that: (1) since 1988, MEWA have failed to pay more than $132 million in claims for almost 400,000 workers and their beneficiaries and two-thirds of the states reported that when MEWA have failed, some participants have been unable to obtain subsequent health coverage; (2) state officials report difficulties in identifying MEWA and bringing them into compliance with applicable state laws and little success in recovering money on behalf of beneficiaries; (3) 90 percent of the states knew of MEWA that they suspected had violated their insurance laws, particularly those pertaining to reporting and disclosure, funding, and registration or licensure requirements; (4) 80 percent of the states said that MEWA claimed preemption from state regulation under the Employee Retirement Income Security Act of 1974 (ERISA) which generally supersedes state laws pertaining to employee benefit plans covered by ERISA; (5) over 70 percent of the states were unable to proactively apply such established standards as funding and reporting and disclosure standards because they were unable to identify MEWA until they received complaints; (6) the Department of Labor announced a program in May 1990 to help states with MEWA problems, but has made only limited progress in implementing it; (7) over 40 percent of the states said Labor assistance was untimely and unclear; and (8) although proposed legislation to establish MEWA standards has such positive features as identifying MEWA through certification and registration, many MEWA would not be affected by the bill.