Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime.

Existing federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA), authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Existing law authorizes an association of employers to offer a large group health care service plan contract, consistent with ERISA, if certain requirements are met. Until January 1, 2026, existing law also authorizes an association of employers to offer a large group health care service plan contract to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association is headquartered in this state, was established before March 23, 2010, and is the sponsor of a MEWA, and that the contract includes coverage of employees of an association member in the biomedical industry.

This bill would authorize an association of employers to offer a large group health care service plan contract to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a MEWA, and that the contract includes coverage of employees of an association member in the engineering, surveying, or design industry. The bill would require an association and MEWA to annually file evidence of ongoing compliance with those requirements in a manner specified by the department. This bill would require the department, on or before June 30, 2028, to provide the health policy committees of the Legislature with the most recent filings. The bill would require the department to conduct an analysis of the impacts of MEWAs on the small employer health insurance market, as specified, authorize the department to coordinate with the Department of Insurance for the analysis, require health care service plans, health insurers, and MEWAs to comply with requests for information, and require the department to post a report summarizing its analysis on its internet website on or before July 1, 2026. The bill, on or after June 1, 2025, would prohibit a plan from marketing, issuing, amending, renewing, or delivering large employer coverage to an association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the department to issue guidance to health care service plans regarding these requirements, as specified. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

This bill would repeal these provisions on January 1, 2030.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime.

Existing federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA), authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Existing law authorizes an association of employers to offer a large group health care service plan contract, consistent with ERISA, if certain requirements are met. Until January 1, 2026, existing law also authorizes an association of employers to offer a large group health care service plan contract to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association is headquartered in this state, was established before March 23, 2010, and is the sponsor of a MEWA, and that the contract includes coverage of employees of an association member in the biomedical industry.

This bill would authorize an association of employers to offer a large group health care service plan contract to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a MEWA, and that the contract includes coverage of employees of an association member in the engineering, surveying, or design industry. The bill would require an association and MEWA to annually file evidence of ongoing compliance with those requirements in a manner specified by the department. This bill would require the department, on or before June 30, 2028, to provide the health policy committees of the Legislature with the most recent filings. The bill would require the department to conduct an analysis of the impacts of MEWAs on the small employer health insurance market, as specified, authorize the department to coordinate with the Department of Insurance for the analysis, require health care service plans, health insurers, and MEWAs to comply with requests for information, and require the department to post a report summarizing its analysis on its internet website on or before July 1, 2026. The bill, on or after June 1, 2025, would prohibit a plan from marketing, issuing, amending, renewing, or delivering large employer coverage to an association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the department to issue guidance to health care service plans regarding these requirements, as specified. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

This bill would repeal these provisions on January 1, 2030.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.

Existing federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA), authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Existing law authorizes an association of employers to offer a large group health care service plan contract or large group health insurance policy, contract, consistent with ERISA, if certain requirements are met. Until January 1, 2026, existing law also authorizes an association of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association is headquartered in this state, was established before March 23, 2010, and is the sponsor of a MEWA, and that the contract or policy includes coverage of employees of an association member in the biomedical industry.

This bill would authorize an association of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a MEWA, and that the contract or policy includes coverage of employees of an association member in the engineering, surveying, or design industry. The bill would require an association and MEWA to annually file evidence of ongoing compliance with those requirements in a manner specified by the departments. department. This bill would require the departments, department, on or before June 30, 2028, to provide the health policy committees of the Legislature with the most recent filings and would require the departments to recommend to the Legislature whether those MEWAs should remain operative based on that compliance. filings. The bill would require the department to conduct an analysis of the impacts of MEWAs on the small employer health insurance market, as specified, authorize the department to coordinate with the Department of Insurance for the analysis, require health care service plans, health insurers, and MEWAs to comply with requests for information, and require the department to post a report summarizing its analysis on its internet website on or before July 1, 2026. The bill, on or after June 1, 2025, would prohibit a plan or insurer from marketing, issuing, amending, renewing, or delivering large employer coverage to an association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the Department of Managed Health Care and the Department of Insurance department to issue guidance to health care service plans and health insurers regarding these requirements, as specified. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

This bill would repeal these provisions on January 1, 2029. 2030.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law, the Knox-Keene Health Care Service Plan Act of 1975, provides for the licensure and regulation of health care service plans by the Department of Managed Health Care and makes a willful violation of the act a crime. Existing law provides for the regulation of health insurers by the Department of Insurance.

Existing federal law, the federal Employee Retirement Income Security Act of 1974 (ERISA), authorizes multiple employer welfare arrangements (MEWAs) in which 2 or more employers join together to provide health care coverage for employees or to their beneficiaries. Existing law authorizes an association of employers to offer a large group health care service plan contract or large group health insurance policy, consistent with ERISA, if certain requirements are met. Until January 1, 2026, existing law also authorizes an association of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association is headquartered in this state, was established before March 23, 2010, and is the sponsor of a MEWA, and that the contract or policy includes coverage of employees of an association member in the biomedical industry.

This bill would authorize an association of employers to offer a large group health care service plan contract or large group health insurance policy to small group employer members of the association, consistent with ERISA, if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a MEWA, and that the contract or policy includes coverage of employees of an association member in the engineering, surveying, or design industry. The bill would require an association and MEWA to annually file evidence of ongoing compliance with those requirements in a manner specified by the departments. This bill would require the departments, on or before June 30, 2028, to provide the health policy committees of the Legislature the most recent filings and would require the departments to recommend to the Legislature whether those MEWAs should remain operative based on that compliance. The bill, on or after June 1, 2025, would prohibit a plan or insurer from marketing, issuing, amending, renewing, or delivering large employer coverage to an association or MEWA that provides a benefit to a resident in this state unless the association and MEWA have registered and are in compliance with the requirements described above, or have filed applications for registration, as specified, that are pending with the department. The bill would authorize the Department of Managed Health Care and the Department of Insurance to issue guidance to health care service plans and health insurers regarding these requirements, as specified. Because a willful violation of these provisions by a health care service plan would be a crime, the bill would impose a state-mandated local program.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

Existing law requires health facilities to be charged a fee, as specified, to be used, upon appropriation, for specified health programs. Existing law authorizes up to $200,000 of these funds to be used, upon appropriation, by the State Department of Public Health for data collection on, analysis of, and reporting on, maternal and perinatal outcomes.

This bill would make technical, nonsubstantive changes to those provisions.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2434

Author:(Grayson)

As Amended Ver:July 3, 2024

Majority vote

SUMMARY

Authorizes an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with Employee Retirement Income Security Act of 1974 (ERISA), if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a multiple employer welfare arrangement (MEWA), and that the contract or policy includes coverage of employees of an association member in the engineering, surveying, or design industry. Requires the Department of Managed Health Care (DMHC) to conduct an analysis of the impacts on the small employer health insurance market in California. Sunsets provisions of this bill on January 1, 2030.

Senate Amendments

Require DMHC to provide health policy committees of the Legislature with the most recent filings made pursuant to this bill by June 30, 2026, instead of 2028. Require DMHC to conduct an analysis of the impacts of the small employer health insurance market. Sunset this bill on January 1, 2030 instead of 2029. Delete Insurance Code provisions from this bill.

COMMENTS

1. Association Health Plans (AHPs). The California Health Care Foundation (CHCF) in a March 2021 Issue Brief writes that under federal law, AHPs are a type of MEWA established or maintained to provide insurance coverage for medical, surgical, hospital care, or other benefits in the event of sickness. AHPs are insurance arrangements that allow small businesses, associations, and self-employed workers to organize together to purchase health care coverage, potentially obtaining lower-priced coverage by spreading risk and negotiating on behalf of a larger set of enrollees. AHPs have long been offered and regulated in the state of California. California law established requirements for small group reform that applied to AHPs, including criteria for guaranteed issue, standard rating rules, defined risk corridors, specific age bands, and the number of geographic regions for the small group insurance market. In 2010, the federal Patient Protection and Affordable Care Act (ACA) changed the rating rules and benefit coverage requirements in the individual and small group markets, and led to the establishment of Covered California. Through Covered California, individuals and employees of participating small businesses can enroll in subsidized and unsubsidized health coverage.

In 2018, according to CHCF, efforts to unwind key provisions of the ACA included the U.S. Department of Labor (DOL) new regulation for AHPs that made it easier for small employers to organize for the purpose of accessing health insurance typically available only to large groups. Proponents of the DOL rule argued that AHPs promote competition in increasingly consolidated insurance markets and provide more affordable options in the face of ever-escalating and unaffordable health insurance premiums. By allowing a more restrictive benefit design, such plans could also be attractive to small groups with a lower-risk profile. Such groups could design products that do not cover the essential health benefits as required for individual and small group plans under the ACA but instead comply with less stringent ERISA consumer protections. Opponents of the DOL rule argued that such plans would create adverse selection by driving higher-risk individuals into the state or federal health insurance marketplace options, increasing costs and ultimately undermining the stability of those risk pools. Premiums for the small group market are determined by a community rating methodology whereby the claims experience across the small group segment is pooled to determine health insurance premiums and annual rate increases.

According to a January 2018 paper authored by the Center on Health Insurance Reforms at Georgetown University, the primary purpose of the DOL rule is to allow more groups of small businesses and self-employed individuals to form AHPs so that they can offer coverage that is regulated under federal law as large-group coverage, and avoid ACA requirements such as essential health benefits (EHBs), premium rating restrictions, the single risk pool requirement and risk adjustment. At that time, an analysis by Avalere Health indicated that individual and small group markets would see premiums rise, over a five-year period, 2.7% to 4% in the individual market and .1% to 1.9% in the small group market relative to current law because healthier enrollees would shift into AHPs. Avalere estimated 2.4 million to 4.3 million would switch to AHPs. In 2018, Covered California released a report indicating that this policy change along with another one related to short-term policies could cause an increase in premiums in 2019 of 0.3% to 1.3%. Together with the elimination of the individual mandate penalties (it should be noted that California subsequently enacted a state individual mandate), premium costs could go up by 12% to 32% in total in 2019.

1. SB 1375 (Hernandez), Chapter 700, Statutes of 2018. In response to the 2018 DOL rule, California enacted SB 1375 to prohibit fully-insured MEWA from selling large group coverage to small employers. In California, small group businesses include any business with at least one but no more than 100 full time employees. SB 1375 protects the state's individual and small group markets from potential adverse selection by specifying that the status of each distinct member of an association determines whether that member's association coverage is individual, small group, or large group health coverage. In other words, if a member in the association is a small group, then the member would need to meet existing small group requirements in California law (i.e., small group premium rating restrictions).

The DMHC issued a 2019 All Plan Letter to remind health plans, solicitors, brokers and others that in California, group coverage may not be sold to individual subscribers directly or "indirectly through any arrangement." California law significantly limits the extent to which employers and individuals may join together to purchase health care coverage as an association. As such, notwithstanding the DOL rule, individuals (including sole proprietors without employees) may purchase individual coverage only, regardless of whether they are in an association. Similarly, small employers may purchase small group coverage only, regardless of whether that coverage is sold through an association.

1. SB 1375 Exemptions. In 2021, two bills were enacted to create two narrow exceptions to the general rule in SB 1375 that plans are barred from selling large group coverage to small employers and individuals through a MEWA. SB 255 (Portantino), Chapter 725, Statutes of 2021, exempts one MEWA that provides health coverage for freelance filming crews in the television commercial production industry. Eligibility requirements of the large group contract is required to provide coverage for employees and their dependents, who are employed in designated job categories on a project-by-project basis for one or more employers with no single project exceeding six months in duration. SB 718 (Bates), Chapter 736, Statutes of 2021, exempts a MEWA that provides health coverage for individuals in the biomedical industry. SB 718 requires the large group health plan to include coverage of common law employees, and their dependents, who are employed by an association member in the biomedical industry and whose employer has operations in California. The provisions related to SB 718 will sunset on January 1, 2026.

Recent Proposed Federal Rule. Late last year, the DOL issued a proposed rule that would rescind the 2018 DOL rule designed to expand the formation and use of AHPs. According to a recent Health Affairs article, in the preamble to its proposed rule, DOL describes its "extensive experience" with unscrupulous promoters and operators of MEWAs. Compared to traditional health insurers, MEWAs have disproportionately suffered from financial mismanagement and abuse, leaving enrollees and providers with significant financial liabilities. Under ERISA, an association can only sponsor an employee health benefit plan when it is acting as an employer. Such plans can only be offered through genuine employment-based arrangements. In its proposed rule, DOL argues that the 2018 DOL rule loosening the business purpose, commonality of interest, and working owner standards do not align with the text and intent of ERISA. The agency also notes that the 2018 DOL rule would have increased adverse selection in the individual and small-group insurance markets. DOL further notes that the 2018 DOL rule would have enabled AHPs to offer coverage not subject to the ACA's EHB standard, enabling them to offer only "skinny" plans that leave workers underinsured. These federal rules are pending.

According to the Author

The American Council of Engineering Companies California (ACEC) represents California's engineering land surveying, and design firms and exists in a federation with ACEC chapters in every state and under the national ACEC parent organization. In 1965, ACEC created the Life/Health Trust (LHT), which provides a way for ACEC's small business members to secure high value, high quality healthcare. Although in existence since 1965, the LHT was not grandfathered in at the time of SB 1375, and will no longer be allowed to offer coverage to California employees of firms with under 100 employees beyond 2024. This will have a profound impact on each individual LHT enrollee's healthcare expenses. This bill will create a specific exemption for the LHT akin to those granted in 2021, allowing the LHT to continue serving small businesses beyond 2024. The author concludes that the exemption will include certain guardrails, ensuring that the coverage provided to these small member firms is in line with the ACA requirements.

Arguments in Support

ACEC, sponsor of this bill, seeks to permit the ACEC LHT to continue offering health insurance coverage beyond 2024 to ACEC small business members in California. ACEC California represents nearly 600 engineering and land surveying firms and over 25,000 professionals who are involved in all aspects of the design, construction, and repair of California's residential, commercial, industrial, and public works infrastructure. ACEC California exists in a federation within the larger ACEC organization, which represents 600,000 design professionals and 6,000 design firms nationwide; 87% of ACEC membership are small businesses with fewer than 100 employees. In 1965, ACEC created the LHT so that employees of ACEC's small business membership could have access to affordable, high-quality health insurance. The LHT has continuously offered these policies in every state and D.C. and as of January 2024 nearly 11,000 Californians receive their health insurance through the LHT. Without this bill, beginning January 1, 2025, employees of ACEC California's small business members will lose access to the LHT and be forced to look for coverage elsewhere. The sponsors conclude that this will immediately and significantly increase their monthly healthcare expenses and will put small design firms at a competitive disadvantage to large firms, which can more easily negotiate with insurers for quality coverage at an affordable rate, both when bidding on public works projects and also when attracting talent.

Arguments in Opposition

There is no known registered opposition to this bill.

FISCAL COMMENTS

According to the Senate Appropriations Committee, the DMHC estimates consulting costs of $500,000 in 2025-26 to conduct the small group market impact analysis (Managed Care Fund). The California Department of Insurance estimates costs of $12,000 in 2024-25, $25,000 in 2025-26 and $16,000 in 2027-28 for state administration (Insurance Fund).

VOTES:

ASM HEALTH: 16-0-0

YES: Bonta, Waldron, Aguiar-Curry, Arambula, Wendy Carrillo, Flora, Haney, Jones-Sawyer, Maienschein, McCarty, Joe Patterson, Rodriguez, Sanchez, Santiago, Schiavo, Weber

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Friedman, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

ASSEMBLY FLOOR: 71-0-9

YES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

ABS, ABST OR NV: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

SENATE FLOOR: 39-0-1

YES: Allen, Archuleta, Ashby, Atkins, Becker, Blakespear, Bradford, Caballero, Cortese, Dahle, Dodd, Durazo, Eggman, Glazer, Gonzalez, Grove, Hurtado, Jones, Laird, Limón, McGuire, Menjivar, Min, Newman, Nguyen, Niello, Ochoa Bogh, Padilla, Portantino, Roth, Rubio, Seyarto, Skinner, Smallwood-Cuevas, Stern, Umberg, Wahab, Wiener, Wilk

ABS, ABST OR NV: Alvarado-Gil

UPDATED

VERSION: July 3, 2024

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0004140

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 2434

Author:(Grayson)

As Amended Ver:July 3, 2024

Majority vote

SUMMARY

Authorizes an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with Employee Retirement Income Security Act of 1974 (ERISA), if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a multiple employer welfare arrangement (MEWA), and that the contract or policy includes coverage of employees of an association member in the engineering, surveying, or design industry. Requires the Department of Managed Health Care (DMHC) to conduct an analysis of the impacts on the small employer health insurance market in California. Sunsets provisions of this bill on January 1, 2030.

Senate Amendments

Require DMHC to provide health policy committees of the Legislature with the most recent filings made pursuant to this bill by June 30, 2026, instead of 2028. Require DMHC to conduct an analysis of the impacts of the small employer health insurance market. Sunset this bill on January 1, 2030 instead of 2029. Delete Insurance Code provisions from this bill.

COMMENTS

1. Association Health Plans (AHPs). The California Health Care Foundation (CHCF) in a March 2021 Issue Brief writes that under federal law, AHPs are a type of MEWA established or maintained to provide insurance coverage for medical, surgical, hospital care, or other benefits in the event of sickness. AHPs are insurance arrangements that allow small businesses, associations, and self-employed workers to organize together to purchase health care coverage, potentially obtaining lower-priced coverage by spreading risk and negotiating on behalf of a larger set of enrollees. AHPs have long been offered and regulated in the state of California. California law established requirements for small group reform that applied to AHPs, including criteria for guaranteed issue, standard rating rules, defined risk corridors, specific age bands, and the number of geographic regions for the small group insurance market. In 2010, the federal Patient Protection and Affordable Care Act (ACA) changed the rating rules and benefit coverage requirements in the individual and small group markets, and led to the establishment of Covered California. Through Covered California, individuals and employees of participating small businesses can enroll in subsidized and unsubsidized health coverage.

In 2018, according to CHCF, efforts to unwind key provisions of the ACA included the U.S. Department of Labor (DOL) new regulation for AHPs that made it easier for small employers to organize for the purpose of accessing health insurance typically available only to large groups. Proponents of the DOL rule argued that AHPs promote competition in increasingly consolidated insurance markets and provide more affordable options in the face of ever-escalating and unaffordable health insurance premiums. By allowing a more restrictive benefit design, such plans could also be attractive to small groups with a lower-risk profile. Such groups could design products that do not cover the essential health benefits as required for individual and small group plans under the ACA but instead comply with less stringent ERISA consumer protections. Opponents of the DOL rule argued that such plans would create adverse selection by driving higher-risk individuals into the state or federal health insurance marketplace options, increasing costs and ultimately undermining the stability of those risk pools. Premiums for the small group market are determined by a community rating methodology whereby the claims experience across the small group segment is pooled to determine health insurance premiums and annual rate increases.

According to a January 2018 paper authored by the Center on Health Insurance Reforms at Georgetown University, the primary purpose of the DOL rule is to allow more groups of small businesses and self-employed individuals to form AHPs so that they can offer coverage that is regulated under federal law as large-group coverage, and avoid ACA requirements such as essential health benefits (EHBs), premium rating restrictions, the single risk pool requirement and risk adjustment. At that time, an analysis by Avalere Health indicated that individual and small group markets would see premiums rise, over a five-year period, 2.7% to 4% in the individual market and .1% to 1.9% in the small group market relative to current law because healthier enrollees would shift into AHPs. Avalere estimated 2.4 million to 4.3 million would switch to AHPs. In 2018, Covered California released a report indicating that this policy change along with another one related to short-term policies could cause an increase in premiums in 2019 of 0.3% to 1.3%. Together with the elimination of the individual mandate penalties (it should be noted that California subsequently enacted a state individual mandate), premium costs could go up by 12% to 32% in total in 2019.

1. SB 1375 (Hernandez), Chapter 700, Statutes of 2018. In response to the 2018 DOL rule, California enacted SB 1375 to prohibit fully-insured MEWA from selling large group coverage to small employers. In California, small group businesses include any business with at least one but no more than 100 full time employees. SB 1375 protects the state's individual and small group markets from potential adverse selection by specifying that the status of each distinct member of an association determines whether that member's association coverage is individual, small group, or large group health coverage. In other words, if a member in the association is a small group, then the member would need to meet existing small group requirements in California law (i.e., small group premium rating restrictions).

The DMHC issued a 2019 All Plan Letter to remind health plans, solicitors, brokers and others that in California, group coverage may not be sold to individual subscribers directly or "indirectly through any arrangement." California law significantly limits the extent to which employers and individuals may join together to purchase health care coverage as an association. As such, notwithstanding the DOL rule, individuals (including sole proprietors without employees) may purchase individual coverage only, regardless of whether they are in an association. Similarly, small employers may purchase small group coverage only, regardless of whether that coverage is sold through an association.

1. SB 1375 Exemptions. In 2021, two bills were enacted to create two narrow exceptions to the general rule in SB 1375 that plans are barred from selling large group coverage to small employers and individuals through a MEWA. SB 255 (Portantino), Chapter 725, Statutes of 2021, exempts one MEWA that provides health coverage for freelance filming crews in the television commercial production industry. Eligibility requirements of the large group contract is required to provide coverage for employees and their dependents, who are employed in designated job categories on a project-by-project basis for one or more employers with no single project exceeding six months in duration. SB 718 (Bates), Chapter 736, Statutes of 2021, exempts a MEWA that provides health coverage for individuals in the biomedical industry. SB 718 requires the large group health plan to include coverage of common law employees, and their dependents, who are employed by an association member in the biomedical industry and whose employer has operations in California. The provisions related to SB 718 will sunset on January 1, 2026.

Recent Proposed Federal Rule. Late last year, the DOL issued a proposed rule that would rescind the 2018 DOL rule designed to expand the formation and use of AHPs. According to a recent Health Affairs article, in the preamble to its proposed rule, DOL describes its "extensive experience" with unscrupulous promoters and operators of MEWAs. Compared to traditional health insurers, MEWAs have disproportionately suffered from financial mismanagement and abuse, leaving enrollees and providers with significant financial liabilities. Under ERISA, an association can only sponsor an employee health benefit plan when it is acting as an employer. Such plans can only be offered through genuine employment-based arrangements. In its proposed rule, DOL argues that the 2018 DOL rule loosening the business purpose, commonality of interest, and working owner standards do not align with the text and intent of ERISA. The agency also notes that the 2018 DOL rule would have increased adverse selection in the individual and small-group insurance markets. DOL further notes that the 2018 DOL rule would have enabled AHPs to offer coverage not subject to the ACA's EHB standard, enabling them to offer only "skinny" plans that leave workers underinsured. These federal rules are pending.

According to the Author

The American Council of Engineering Companies California (ACEC) represents California's engineering land surveying, and design firms and exists in a federation with ACEC chapters in every state and under the national ACEC parent organization. In 1965, ACEC created the Life/Health Trust (LHT), which provides a way for ACEC's small business members to secure high value, high quality healthcare. Although in existence since 1965, the LHT was not grandfathered in at the time of SB 1375, and will no longer be allowed to offer coverage to California employees of firms with under 100 employees beyond 2024. This will have a profound impact on each individual LHT enrollee's healthcare expenses. This bill will create a specific exemption for the LHT akin to those granted in 2021, allowing the LHT to continue serving small businesses beyond 2024. The author concludes that the exemption will include certain guardrails, ensuring that the coverage provided to these small member firms is in line with the ACA requirements.

Arguments in Support

ACEC, sponsor of this bill, seeks to permit the ACEC LHT to continue offering health insurance coverage beyond 2024 to ACEC small business members in California. ACEC California represents nearly 600 engineering and land surveying firms and over 25,000 professionals who are involved in all aspects of the design, construction, and repair of California's residential, commercial, industrial, and public works infrastructure. ACEC California exists in a federation within the larger ACEC organization, which represents 600,000 design professionals and 6,000 design firms nationwide; 87% of ACEC membership are small businesses with fewer than 100 employees. In 1965, ACEC created the LHT so that employees of ACEC's small business membership could have access to affordable, high-quality health insurance. The LHT has continuously offered these policies in every state and D.C. and as of January 2024 nearly 11,000 Californians receive their health insurance through the LHT. Without this bill, beginning January 1, 2025, employees of ACEC California's small business members will lose access to the LHT and be forced to look for coverage elsewhere. The sponsors conclude that this will immediately and significantly increase their monthly healthcare expenses and will put small design firms at a competitive disadvantage to large firms, which can more easily negotiate with insurers for quality coverage at an affordable rate, both when bidding on public works projects and also when attracting talent.

Arguments in Opposition

There is no known registered opposition to this bill.

FISCAL COMMENTS

According to the Senate Appropriations Committee, the DMHC estimates consulting costs of $500,000 in 2025-26 to conduct the small group market impact analysis (Managed Care Fund). The California Department of Insurance estimates costs of $12,000 in 2024-25, $25,000 in 2025-26 and $16,000 in 2027-28 for state administration (Insurance Fund).

VOTES:

ASM HEALTH: 16-0-0

YES: Bonta, Waldron, Aguiar-Curry, Arambula, Wendy Carrillo, Flora, Haney, Jones-Sawyer, Maienschein, McCarty, Joe Patterson, Rodriguez, Sanchez, Santiago, Schiavo, Weber

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Bryan, Calderon, Wendy Carrillo, Dixon, Mike Fong, Friedman, Haney, Hart, Jim Patterson, Pellerin, Ta, Villapudua

ASSEMBLY FLOOR: 71-0-9

YES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

ABS, ABST OR NV: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

UPDATED

VERSION: July 3, 2024

CONSULTANT: Kristene Mapile / HEALTH / (916) 319-2097 FN: 0004140

 THIRD READING  

Bill No: AB 2434

Author: Grayson (D), et al.

Amended: 7/3/24 in Senate

Vote: 21

SENATE HEALTH COMMITTEE: 11-0, 7/3/24

AYES: Roth, Nguyen, Glazer, Gonzalez, Grove, Hurtado, Limón, Menjivar, Rubio, Smallwood-Cuevas, Wiener

SENATE APPROPRIATIONS COMMITTEE: 7-0, 8/15/24

AYES: Caballero, Jones, Ashby, Becker, Bradford, Seyarto, Wahab

ASSEMBLY FLOOR: 71-0, 5/16/24 (Consent) - See last page for vote

SUBJECT: Health care coverage: multiple employer welfare arrangements

SOURCE: American Council of Engineering Companies of California

DIGEST:

This bill (1) authorizes an association of employers that sponsors a fully insured multiple employee welfare arrangement (MEWA) to register with DMHC on or before June 1, 2025 to offer large group plan contracts to small employer members in the engineering, surveying, or design industry; (2) requires on or before July 1, 2026, the Department of Managed Health Care (DMHC) to provide the health policy committees of the Legislature required filings, and conduct an analysis of MEWA impacts on the small employer health insurance market in California; and (3) sunsets this authority on January 1, 2030.

ANALYSIS:

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurance. [HSC §1340, et seq. and INS §106, et seq.]
2. Establishes rules for small group health plan contracts and health insurance policies that were in existence prior to the passage of the Affordable Care Act (ACA), referred to as grandfathered small employer health plans and health insurance policies. [HSC §1357.600, et seq. and INS §10755, et seq.]
3. Establishes rules for small group health plan contracts and health insurance policies to meet requirements of the ACA governed by nongrandfathered small employer requirements. [HSC §1357.500, et seq. and INS §10753, et seq.]
4. Requires the status of each distinct member of an association to determine whether that member’s association coverage is individual, small group, or large group health coverage. [HSC §1357.503 and INS §10753.05]
   
5. Permits until January 1, 2026 an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with the federal Employee Retirement Income Security Act of 1974 (ERISA), if specified requirements. [HSC §1357.503 and INS §10753.05]
6. Prohibits, on or after January 1, 2022, a health plan or health insurer from marketing, issuing, amending, renewing, or delivering large employer health care coverage to a MEWA that provides any benefit to a resident of California unless the MEWA is registered and complies with 5) above, or has an application pending. Requires DMHC or CDI to determine whether the MEWA is in compliance. [HSC §1357.503 and INS §10753.05]

This bill:

1. Authorizes an association of employers to offer a large group health plan contract to small group employer members of the association, consistent with ERISA, if specified requirements are met such as:
   1. The association was established prior to January 1, 1966, has been in continuous existence since that date, and is a bona fide association or group of employers that may act as an employer under ERISA. The association is the sponsor of a MEWA, as defined;
   2. The MEWA has offered a large group health plan contract since January 1, 2012, in connection with an employee welfare benefit plan under ERISA;
   3. The large group health plan contract includes coverage of common law employees, and their dependents, who are employed by an association member in the engineering, surveying, or design industry and whose employer has operations in California; and,
   4. The association and the MEWA file applications for registration with DMHC on or before June 1, 2025.
2. Requires an association and MEWA that timely register with DMHC prior to June 1, 2025 and that are found to be in compliance with this bill, to annually file evidence of ongoing compliance, in a form and manner set forth by DMHC.
3. Requires DMHC to conduct an analysis of the impacts on the small employer health insurance market in California of health plans and health insurers currently issuing large group contracts and policies to small employers through MEWAs. The analysis is to determine the extent to which coverage of Californians in existing MEWAs has any detrimental impacts on the affordability of and access to small group health insurance for small businesses in California who do not purchase health insurance through a MEWA. Permits coordination with CDI. Requires compliance with requests for information. Requires DMHC to post a report summarizing its analysis on or before July 1, 2026. Permits DMHC to contract with experts to assist with the analysis.
4. Prohibits on or after June 1, 2025, a health plan or health insurer from marketing, issuing, amending, renewing, or delivering large employer health plan coverage to any association or MEWA that provides any benefit to a resident in this state unless the association and MEWA have registered with DMHC and are found to be in compliance with the requirements set forth in 1) above or unless the association and MEWA filed applications for registration pursuant to 1) above and the applications are pending before DMHC. Requires DMHC to have the authority to determine compliance with the requirements set forth in 1) above.
5. Sunsets this authority on January 1, 2030, and as of that date is repealed.

Comments

1. Author’s statement. According to the author, the American Council of Engineering Companies California (ACEC), ACEC represents California’s engineering land surveying, and design firms and exists in a federation with ACEC chapters in every state and under the national ACEC parent organization. In 1965, ACEC created the Life/Health Trust (LHT), which provides a way for ACEC’s small business members to secure high value, high quality healthcare. Although in existence since 1965, the LHT was not grandfathered in at the time of SB 1375 and will no longer be allowed to offer coverage to California employees of firms with under 100 employees beyond 2024. This will have a profound impact on each individual LHT enrollee’s healthcare expenses. This bill will create a specific exemption for the LHT akin to those granted in 2021, allowing the LHT to continue serving small businesses beyond 2024. The exemption will include certain guardrails, ensuring that the coverage provided to these small member firms is in line with the ACA requirements.
2. Look-through. SB 1375 (Hernandez, Chapter 700, Statutes of 2018) was intended to make California law clear and consistent with federal ACA rules even if individuals or small employers join together in an association by codifying long standing federal look-through policy.
3. DMHC All Plan Letter (APL). On December 9, 2019, DMHC issued APL 19-024, reminding health plans, solicitors, brokers and others that in California, group coverage may not be sold to individual subscribers directly or “indirectly through any arrangement.” Likewise, large group coverage may not be sold to small employers through MEWAs, Association Health Plans (AHPs), voluntary employees’ beneficiary associations (VEBAs) or any similar arrangements (collectively “associations”). Due to the COVID-19 state of emergency, on May 5, 2020, the DMHC issued APL 20-019 to extend the end of the phase-out period through October 31, 2020. On August 21, 2020, DMHC extended the end of the phase-out period through February 28, 2021. On March 24, 2022, DMHC issued APL 22-012 describing the narrow exemption created to the law with the passage of SB 255 (Chapter 725, Statues of 2021 and SB 718 (Chapter 736, Statutes of 2021). This APL required compliance filings to be submitted on or before April 15, 2022 and reminded plans that MEWA registration is required by June 1, 2022. Requirements for submission and filings were detailed in the APL. On April 20, 2023 DMHC issued APL 23-013 in which DMHC recognized that some health plans and MEWAs continue to renew large group coverage while DMHC was reviewing compliance submissions for SB 255 and SB 718. As such plans contracting with MEWAs were permitted to continue to renew for up to one year until December 31, 2023, if the health plan submitted specified information on or before May 19, 2023. The APL also exempted Taft-Hartley and Davis-Bacon Trusts from SB 1375.
4. Why restrict/limit MEWAs? MEWAs are based on a premise that larger groups can negotiate better rates through their purchasing power and economies of scale, and save on administrative costs. An Urban Institute report indicates experts have raised concerns about AHPs claiming large group status because of the potential for adverse selection and increased premiums when different regulatory frameworks exist for the same type of health plan purchaser. Health insurers are generally allowed to adjust premiums based on health status and other permissible factors that apply to the large group market, small employers with younger, healthier employees may find more competitive premiums under plans regulated under large group rules. Small employer groups with higher risk profiles have less incentive to purchase through AHPs because they would be exposed to higher premiums and larger rate increases. Over time, if healthy groups gravitate to association coverage, this could subsequently lead to market segmentation and adverse selection in the plans sold through the small group market, including through market places such as Covered California, and the small group market outside of Covered California which is substantially larger than the Covered California small group market place.
5. Enforcement issues. At both the federal and state level monitoring and enforcement of AHP/MEWAs has been challenging. In comments responding to the Trump Administration rule, some raised concerns about minimal oversight by the federal Department of Labor (DOL). While there is a fine of $1,000 per day if AHPs do not file or file incomplete information, there is no evidence DOL has ever used this authority. According to a 2004 General Accounting Office (GAO) report, during scams in 2000’s, DOL relied mostly on states to issue cease and desist orders on fraudulent MEWAs. In California, with regard to fully insured MEWAs, three have registered. However, many more have been reported on both CDI and DMHC websites. In addition, the approximately 150,000 individuals covered through these arrangements in 2019 has grown to over 200,000 in a four-year period.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: Yes

According to the Senate Appropriations Committee:

• DMHC estimates consulting costs of $500,000 in 2025-26 to conduct the small group market impact analysis (Managed Care Fund).
• CDI estimates costs of $12,000 in 2024-25, $25,000 in 2025-26 and $16,000 in 2027-28 for state administration (Insurance Fund).

SUPPORT: (Verified 8/14/24)

American Council of Engineering Companies of California (source)
4Creeks, INC.

Aliquot
ArcSine Engineering
Associated Transportation Engineers
Aurum Consulting Engineers
Base Consulting
Bethel Engineering
BKF Engineers
Blackburn Consulting
Bowman & Williams
Brooks Ransom Associates
Buehler Engineering
C2G / Civil Consultants Group, Inc.
Cabrinha, Hearn & Associates
California & Nevada Civil Engineers and Land Surveyors Association, INC.
California Geotechnical Engineers Association
Capo Projects Group
CE 2 Corporation
Christian Wheeler Engineering
Civil Engineering Associates
CMAG Engineering
Coleman Engineering
Cornerstone Earth Group
Cornerstone Structural Engineering

CriticalArc

Cullen-Sherry & Associates, INC.
Degenkolb Engineers
DES Architects + Engineers
Elevate Environmental Consultants
Fargen Surveys
Forell Elsesser Engineers

Geotechonologies, INC.
Grice Engineering
Groza Construction
Guida Surveying INC.
Hale Engineering
Hanagan Land Surveying
HD Geosolutions
HMH Engineers
Hogan Land Services
Howard Carter Associates
Ifland Engineers

Inland Foundation Egineering
International Bridge Technologies
iWalk, INC.
Jackson & Sands Engineering
Jensen Design & Survey
Joseph C. Truxaw and Associates, INC.
Kurt Fischer Structural Engineering
Kyler Engineering
Lane Engineers
Mesiti-miller Engineering, INC.
Michael K. Nunley & Associates, INC.
Mid Pacific Engineering, INC.
MNS Engineers

Monterey Bay Engineers, INC.
MSO Technologies, INC.
Nasland Engineering
North Coast Engineering
Owens Design

Pacific Crest Engineering

Pacific Engineering & Consulting, INC.
Polaris Land Surveying, INC.
Quad Knopf, INC.
R & S Tavares Associates
Rasmussen Land Surveying, INC.

RGF Engineering, INC.
Rinne & Peterson, INC.
RKA Consulting Group
Romig Engineers
RRM Design Group
Sharrah Dunlap Sawyer, INC.
Talas Engineering
Tanner Pacific, INC.
Towill
TRC Parkitects
Watry Design, INC.

West Yost
Whitson Engineers
Wilson Ihrig
Yamabe and Horn Engineering, INC.

Yeh and Associates, INC.
ZT Consulting Group

OPPOSITION: (Verified 8/14/24)

None received

ARGUMENTS IN SUPPORT: This bill’s sponsor, ACEC, writes that ACEC California represents nearly 600 engineering and land surveying firms and over 25,000 professionals who are involved in all aspects of the design, construction, and repair of California’s residential, commercial, industrial, and public works infrastructure. ACEC California exists in a federation within the larger ACEC organization, which represents 600,000 design professionals and 6,000 design firms nationwide; 87% of ACEC membership are small businesses with fewer than 100 employees. In 1965, ACEC created LHT so that employees of ACEC’s small business membership could have access to affordable, high-quality health insurance. The LHT has continuously offered these policies in every state and D.C. and as of January 2024, nearly 11,000 Californians receive their health insurance through the LHT. Without this bill, beginning January 1, 2025, employees of ACEC California’s small business members will lose access to the LHT and be forced to look for coverage elsewhere. This will immediately and significantly increase their monthly healthcare expenses and will put small design firms at a competitive disadvantage to large firms – which can more easily negotiate with insurers for quality coverage at an affordable rate – both when bidding on public works projects and also when attracting talent.

ASSEMBLY FLOOR: 71-0, 5/16/24

AYES: Aguiar-Curry, Alanis, Arambula, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Juan Carrillo, Wendy Carrillo, Chen, Connolly, Davies, Dixon, Essayli, Mike Fong, Friedman, Gabriel, Gallagher, Garcia, Grayson, Haney, Hart, Holden, Hoover, Jackson, Jones-Sawyer, Kalra, Lackey, Lee, Low, Lowenthal, Maienschein, McCarty, McKinnor, Muratsuchi, Stephanie Nguyen, Ortega, Pacheco, Papan, Jim Patterson, Joe Patterson, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Rendon, Reyes, Luz Rivas, Rodriguez, Blanca Rubio, Sanchez, Santiago, Schiavo, Soria, Ta, Ting, Valencia, Villapudua, Waldron, Wallis, Ward, Weber, Wicks, Wilson, Wood, Zbur, Robert Rivas

NO VOTE RECORDED: Addis, Alvarez, Cervantes, Megan Dahle, Flora, Vince Fong, Gipson, Irwin, Mathis

Prepared by: Teri Boughton / HEALTH / (916) 651-4111

8/18/24 9:07:44

**** END ****

SENATE COMMITTEE ON APPROPRIATIONS

Senator Anna Caballero, Chair

2023 - 2024 Regular Session

AB 2434 (Grayson) - Health care coverage: multiple employer welfare arrangements

Bill Summary:

AB 2434 would authorize an association of employers in the engineering, surveying, or design industry to offer a large group health plan contract to small group employer members of the association, as specified.

Fiscal Impact:

• The Department of Managed Health Care (DMHC) estimates consulting costs of $500,000 in 2025-26 to conduct the small group market impact analysis (Managed Care Fund).
• The California Department of Insurance (CDI) estimates costs of $12,000 in 2024-25, $25,000 in 2025-26 and $16,000 in 2027-28 for state administration (Insurance Fund).

Background:

The DMHC regulates health plans under the Knox-Keene Act and the CDI regulates health insurance. Current law prohibits, on or after January 1, 2022, a health plan or health insurer from marketing, issuing, amending, renewing, or delivering large employer health care coverage to a multiple employer welfare arrangement (MEWA) that provides any benefit to a resident of California unless the MEWA is registered and complies with the provisions below, or has an application pending.

Current law permits until January 1, 2026 an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with the federal Employee Retirement Income Security Act of 1974 (ERISA), if specified requirements are met such as:

• The association is headquartered in California, was established prior to March 23, 2010, has been in continued existence since, and is a bona fide association or group of employers that may act as an employer under ERISA;
• The association is the sponsor of a MEWA, and the MEWA is fully insured, headquartered in California, and is in full compliance with all applicable state and federal laws;
• The MEWA has offered a large group health plan contract or health insurance policy since January 1, 2012, in connection with an employee welfare benefit plan;
• The large group health plan contract or health insurance policy offers to employees a level of coverage having an actuarial value greater than or equivalent to the platinum level of coverage available through Covered California and covers essential health benefits, as specified;
• The large group health plan contract or health insurance policy includes coverage of common law employees, and their dependents, who are employed by an association member in the biomedical industry and whose employer has operations in California;
• The association and MEWA file applications for registration with the DMHC or CDI on or before June 1, 2022;
• The association and MEWA that are found to be in compliance to annually file evidence of ongoing compliance with the DMHC or CDI.

Proposed Law:

Specific provisions of the bill would:

• Authorize an association of employers to offer a large group health plan contract to small group employer members of the association, if certain conditions are met, including:
  • The association was established prior to January 1, 1966, has been in continuous existence since that date, and is a bona fide association or group of employers that may act as an employer under ERISA; and the association is the sponsor of a MEWA.
  • The MEWA is fully insured, is in full compliance with all applicable state and federal laws, and has offered a large group health plan contract since January 1, 2012 in connection with an employee welfare benefit plan under ERISA.
  • The large group health plan contract includes coverage of common law employees, and their dependents, who are employed by an association member in the engineering, surveying, or design industry and whose employer has operations in California.
  • The association and the MEWA file applications for registration with the DMHC on or before June 1, 2025.
• Require the association and MEWA that are found to be in compliance to annually file evidence of ongoing compliance with DMHC; and require DMHC, by June 30, 2026, to provide the health policy committees of the Legislature with the most recent filings made regarding the evidence of ongoing compliance.
• Require DMHC to conduct an analysis of the impacts on the small employer health insurance market in California of health plans and health insurers currently issuing large group contracts and policies to small employers through MEWAs; provide that DMHC may coordinate with the CDI; and require health plans/insurers and MEWAs to comply with requests for information from the DMHC and CDI to complete this analysis.
• Sunset the provisions on January 1, 2030.

Related Legislation:

AB 2072 (Weber) would extend authority for an association of employers in the biomedical industry to offer a large group health plan contract or health insurance policy to small group employer members of the association, as specified. The bill is scheduled to be heard August 5, 2024 in this committee.

-- END --

SENATE COMMITTEE ON HEALTH

Senator Richard Roth, Chair

BILL NO: AB 2434

SUBJECT: Health care coverage: multiple employer welfare arrangements

SUMMARY:

1. This bill authorizes an association of employers that sponsors a fully insured multiple employee welfare arrangement (MEWA) to register with DMHC or CDI on or before June 1, 2025 to offer large group plan contracts to small employer members in the engineering, surveying, or design industry. Requires on or before June 30, 2028, the Department of Managed Health Care (DMHC) and the California Department of Insurance (CDI) to provide the health policy committees of the Legislature required filings, and to provide a recommendation to the Legislature as to whether any MEWAs that have registered with DMHC and CDI should cease to be operative or whether they should remain operative based on compliance with the law. Sunsets this authority on January 1, 2029.

Existing law:

1. Establishes the Department of Managed Health Care (DMHC) to regulate health plans and the California Department of Insurance (CDI) to regulate health insurance. [HSC §1340, et seq. and INS §106, et seq.]
2. Establishes rules for small group health plan contracts and health insurance policies that were in existence prior to the passage of the Affordable Care Act (ACA), referred to as grandfathered small employer health plans and health insurance policies. [HSC §1357.600, et seq. and INS §10755, et seq.]
3. Establishes rules for small group health plan contracts and health insurance policies to meet requirements of the ACA governed by nongrandfathered small employer requirements. [HSC §1357.500, et seq. and INS §10753, et seq.]
4. Requires the status of each distinct member of an association to determine whether that member’s association coverage is individual, small group, or large group health coverage. [HSC §1357.503 and INS §10753.05]
5. Permits until January 1, 2026 an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with the federal Employee Retirement Income Security Act of 1974 (ERISA), if specified requirements are met such as:
   1. The association is headquartered in California, was established prior to March 23, 2010, has been in continued existence since, and is a bona fide association or group of employers that may act as an employer under ERISA. The association is the sponsor of a MEWA, and the MEWA is fully insured, headquartered in California, and is in full compliance with all applicable state and federal laws;
   2. The MEWA has offered a large group health plan contract or health insurance policy since January 1, 2012, in connection with an employee welfare benefit plan;
   3. The large group health plan contract or health insurance policy offers to employees a level of coverage having an actuarial value greater than or equivalent to the platinum level of coverage available through Covered California and covers essential health benefits, as specified;
   4. The large group health plan contract or health insurance includes coverage of common law employees, and their dependents, who are employed by an association member in the biomedical industry and whose employer has operations in California;
   5. The association and MEWA files an application for registration with the DMHC or CDI on or before June 1, 2022; and,
   6. Requires an association and MEWA that timely registers and is found to be in compliance to annually file evidence of ongoing compliance or has applications pending. [HSC §1357.503 and INS §10753.05]
6. Prohibits, on or after January 1, 2022, a health plan or health insurer from marketing, issuing, amending, renewing, or delivering large employer health care coverage to a MEWA that provides any benefit to a resident of California unless the MEWA is registered and complies with 5) above, or has an application pending. Requires DMHC or CDI to determine whether the MEWA is in compliance. [HSC §1357.503 and INS §10753.05]
7. Establishes the Office of Health Care Affordability (OHCA) in the Department of Health Care Access and Information (HCAI), which is responsible for analyzing the health care market for cost trends and drivers of spending, developing data-informed policies for lowering health care costs for consumers and purchasers, creating a state strategy for controlling the cost of health care and ensuring affordability for consumers and purchasers, and enforcing cost targets. [HSC §127501]
8. Requires OHCA to review and evaluate the impact of consolidation, market power, and other market failures through cost and market impact reviews of mergers, acquisitions, or corporate affiliations involving health plans, health insurers, hospitals, physician organizations, pharmacy benefit managers, and other health care entities. [HSC §127507]
9. Requires OHCA to monitor cost trends, including conducting research and studies on the health care market, including, but not limited to, the impact of consolidation, market power, venture capital activity, profit margins, and other market failures on competition, prices, access, quality, and equity. [HSC §127507]

This bill:

1. Authorizes an association of employers to offer a large group health plan contract to small group employer members of the association, consistent with ERISA, if all of the following requirements are met:
   1. The association was established prior to January 1, 1966, has been in continuous existence since that date, and is a bona fide association or group of employers that may act as an employer under ERISA. The association is the sponsor of a MEWA, as defined;
   2. The MEWA is fully insured as described in ERISA and is in full compliance with all applicable state and federal laws;
   3. The MEWA has offered a large group health plan contract since January 1, 2012, in connection with an employee welfare benefit plan under ERISA;
   4. The large group health plan contract offers to employees a level of coverage having an actuarial value equivalent to, or greater than, the platinum level of coverage available through the California Health Benefit Exchange and provides coverage for essential health benefits and any rules or regulations pursuant to that law;
   5. The large group health plan contract includes coverage of common law employees, and their dependents, who are employed by an association member in the engineering, surveying, or design industry and whose employer has operations in California;
   6. The large group health plan offers only fully insured benefits through an insurance contract with a health plan licensed by DMHC or CDI;
   7. Association members purchasing health coverage have a minimum of two full-time common law employees and are current employer members of the association sponsoring the MEWA. Employer members of the association subsidize employee premiums by at least 51%;
   8. The association is an organization with business and organizational purposes unrelated to the provision of health care benefits and existed prior to the establishment of the MEWA offering the employee welfare benefit plan;
   9. The participating member employers have a commonality of interests from being in the same industry, unrelated to the provision of health care benefits;
   10. Membership in the association is open solely to employers, and the participating member employers, either directly or indirectly, exercise control over the employee welfare benefit plan, the MEWA, and the large group health care service plan contract, both in form and substance;
   11. The large group health care service plan contract is treated as a single-risk-rated contract that is guaranteed issued and renewable for member employers, as well as their employees and dependents. An employee or dependent is not charged premium rates based on health status and is not excluded from coverage based upon any preexisting condition. Employee and dependent eligibility are not directly or indirectly based on health status or claims of any person. An employer otherwise eligible is not excluded from participating in a MEWA, or offering or renewing the large group health care service plan contract, based on the health status or claims of any employee or dependent;
   12. The MEWA at all times covers at least 101 employees; and,
   13. The association and the MEWA file applications for registration with DMHC or CDI on or before June 1, 2025.
       
2. Requires an association and MEWA that timely register with DMHC or CDI prior to June 1, 2025 and that are found to be in compliance with this bill, to annually file evidence of ongoing compliance, in a form and manner set forth by DMHC or CDI.
   
3. Requires and association and MEWA to be subject to the restrictions provided in existing law.
   
4. Requires an association and MEWA that have registered with DMHC or CDI and fail to show ongoing compliance in their annual filing to be subject to the restrictions existing law.
   
5. Requires by June 30, 2028, DMHC to provide the health policy committees of the Legislature the most recent filings made pursuant to 4) above and to provide a recommendation to the Legislature as to whether any MEWAs that have registered with DMHC or CDI pursuant bill should cease to be operative or whether they should remain operative based on compliance with this bill.
   
6. Requires the filings and recommendations to be submitted pursuant to and in compliance with Section 9795 of the Government Code.
   
7. Prohibits on or after June 1, 2025, a health plan or health insurer from marketing, issuing, amending, renewing, or delivering large employer health plan coverage to any association or MEWA that provides any benefit to a resident in this state unless the association and MEWA have registered with DMHC or CDI and are found to be in compliance with the requirements set forth in 1) above or unless the association and MEWA filed applications for registration pursuant to 1) above and the applications are pending before DMHC or CDI. Requires DMHC or CDI to have the authority to determine compliance with the requirements set forth in 1) above.
   
8. Authorizes DMHC to issue guidance to health plans, associations, and MEWAs regarding registration and compliance with 1) above. The guidance shall not be subject to the Administrative Procedure Act.
   
9. Indicates 1) above does not apply to, or in any way affect, a self-funded or partially self-funded MEWA subject to the Insurance Code.
   
10. Sunsets this authority on January 1, 2029, and as of that date is repealed.
    

FISCAL EFFECT:

Minor and absorbable costs to the DMHC and CDI.

PRIOR VOTES:

COMMENTS:

1. Author’s statement. According to the author, the American Council of Engineering Companies California (ACEC), ACEC represents California’s engineering land surveying, and design firms and exists in a federation with ACEC chapters in every state and under the national ACEC parent organization. In 1965, ACEC created the Life/Health Trust (LHT), which provides a way for ACEC’s small business members to secure high value, high quality healthcare. Although in existence since 1965, the LHT was not grandfathered in at the time of SB 1375 and will no longer be allowed to offer coverage to California employees of firms with under 100 employees beyond 2024. This will have a profound impact on each individual LHT enrollee’s healthcare expenses. This bill will create a specific exemption for the LHT akin to those granted in 2021, allowing the LHT to continue serving small businesses beyond 2024. The exemption will include certain guardrails, ensuring that the coverage provided to these small member firms is in line with the ACA requirements.
   
2. Look-through. SB 1375 (Hernandez, Chapter 700, Statutes of 2018) was intended to make California law clear and consistent with federal ACA rules even if individuals or small employers join together in an association by codifying long standing federal look-through policy. As indicated in a 2011 Centers for Medicare & Medicaid Services (CMS) Information Bulletin, although the ACA revised the Public Health Services (PHS) Act, it did not modify the underlying PHS Act framework for determining whether health insurance coverage issued through associations was individual or group health insurance coverage. The analysis set forth since August 2002 remains authoritative for determining when association coverage is considered individual or group coverage. The PHS Act derives its definition of group health plan and employer from the ERISA definitions of employee welfare benefit plan and employer. Under ERISA, an employer is “any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan; and includes a group or association of employers acting for an employer in such capacity.” ERISA is relied upon in establishing the existence of a group health plan and determining the identity of the “employer” sponsoring the plan. The size of each individual employer participating in the association determines whether that employer’s coverage is subject to the small group market or the large group rules. In rare instances where the association of employers is sponsoring the group health plan and association itself is deemed the “employer,” the association coverage is considered a single group health plan. In that case, the number of employees employed by all of the employers participating in the association determines whether the coverage is subject to the small group market or large group market rules. In a mixed association (where different members have coverage that is subject to individual, small group, and/or large group market rules) it is not permissible under the PHS Act for mixed association coverage to comply only with the large group market rules. Each association member must receive coverage that complies with the requirements rising out of its status as an individual, small employer, or large employer.
   
3. DMHC All Plan Letter (APL). On December 9, 2019, DMHC issued APL 19-024, reminding health plans, solicitors, brokers and others that in California, group coverage may not be sold to individual subscribers directly or “indirectly through any arrangement.” Likewise, large group coverage may not be sold to small employers through MEWAs, Association Health Plans (AHPs), voluntary employees’ beneficiary associations (VEBAs) or any similar arrangements (collectively “associations”). California law significantly limits the extent to which employers and individuals may join together to purchase health care coverage as an association. The Knox-Keene Act provides for “guaranteed associations,” but prohibits the formation of new guaranteed associations.” And, even with respect to guaranteed associations, the Knox-Keene Act considers them to be “small employers;” they are not eligible to purchase large group coverage for their members. For all other associations (i.e. those that do not meet the definition of a guaranteed association), California law “looks through” the association to determine the appropriate market segment for the particular purchaser. SB 1375 codified this look-through by expressly stating: “The status of each distinct member of an association shall determine whether that member’s association coverage is individual, small group, or large group health coverage.” Due to the COVID-19 state of emergency, on May 5, 2020, the DMHC issued APL 20-019 to extend the end of the phase-out period through October 31, 2020. On August 21, 2020, DMHC extended the end of the phase-out period through February 28, 2021. On March 24, 2022, DMHC issued APL 22-012 describing the narrow exemption created to the law with the passage of SB 255 (Chapter 725, Statues of 2021 and SB 718 (Chapter 736, Statutes of 2021). This APL required compliance filings to be submitted on or before April 15, 2022 and reminded plans that MEWA registration is required by June 1, 2022. Requirements for submission and filings were detailed in the APL. On April 20, 2023 DMHC issued APL 23-013 in which DMHC recognized that some health plans and MEWAs continue to renew large group coverage while DMHC was reviewing compliance submissions for SB 255 and SB 718. As such plans contracting with MEWAs were permitted to continue to renew for up to one year until December 31, 2023, if the health plan submitted specified information on or before May 19, 2023. The APL also exempted Taft-Hartley and Davis-Bacon Trusts from SB 1375.
   
4. AHP/MEWAs in California. A March 2021 California Health Care Foundation report indicates regardless of recent federal and state legislation and litigation, reviews of DMHC filings and interviews suggest that AHPs remain an enduring and evolving component of California’s health insurance landscape. As of 2019, approximately 83 MEWAs, representing 151,000 enrollees, reported their enrollment data to state regulators. Commonly represented industries included agriculture, construction, education, food services, publishing and print organizations, real estate, and restaurant workers. A number of these organizations are represented by a single educational labor trust, professional employment organizations, industry-centric trusts, and brokerage firms. The vast majority of MEWAs are underwritten by Anthem Blue Cross, with a limited number spread across additional carriers such as Aetna Health of California, Blue Shield of California, Health Net of California, Kaiser Foundation Health Plan, Sistemas Medicos Nacionales, and Western Health Advantage. In 2023, those numbers have grown. DMHC filings show there were more than 190,000 enrollees covered in fully insured MEWAs and CDI filings show there were more than 20,500 insureds covered in fully insured MEWAs. Another 68,000 insureds are covered in self-insured MEWAs at CDI. During this four year period the small group market enrollment reported to DMHC dropped by over 200,000 lives.
   
5. Why does it matter? MEWAs are based on a premise that larger groups can negotiate better rates through their purchasing power and economies of scale, and save on administrative costs. Around the passage of the federal ACA in 2010, which included major consumer protection reforms in the individual and small group health insurance markets it was reported that some AHPs were sidestepping ACA requirements for the small group market by claiming single large-group health plan status under ERISA. According to the federal Department of Labor rules, where membership in a group or association is open to anyone engaged in a particular trade or profession regardless of their status as employers (i.e., the group or association members include persons who are not employers) or where control of the group or association is not vested solely in employer members, the group or association is not a bona fide group or association of employers for purposes of ERISA. An Urban Institute report indicates experts have raised concerns about AHPs claiming large group status because of the potential for adverse selection and increased premiums when different regulatory frameworks exist for the same type of health plan purchaser. Health insurers are generally allowed to adjust premiums based on health status and other permissible factors that apply to the large group market, small employers with younger, healthier employees may find more competitive premiums under plans regulated under large group rules. Small employer groups with higher risk profiles have less incentive to purchase through AHPs because they would be exposed to higher premiums and larger rate increases. Over time, if healthy groups gravitate to association coverage, this could subsequently lead to market segmentation and adverse selection in the plans sold through the small group market, including through market places such as Covered California, and the small group market outside of Covered California which is substantially larger than the Covered California small group market place.
   
6. MEWA Expansion. Under the Trump Administration regulatory efforts were attempted to broaden the criteria for determining when employers may join together in an employer group or association that is treated as the employer sponsor of single multiple-employer welfare benefit plan. The rules were challenged and not implemented and have been repealed under the Biden Administration, but actuary analysis at the time indicated that the policy would cause premiums to rise in the individual and small group insurance markets over time. Additionally, California regulators raised concerns over the impacts to California’s insurance markets.
   
7. Effects of higher premium rates. A Small Business Majority poll published earlier in 2024, indicates that small businesses that offer health coverage to their employees are seeing rising premium costs and higher deductibles and cost-sharing, which causes small employers to increase employee contributions, offer more limited coverage, cut other benefits, or drop coverage for their employee’s altogether. Segmenting some small groups out of the small group market may benefit some but will have implications for others who remain in the small group market. Much of this has to do with health insurance risk pools and how the products are rated. According to a Boston University module on paying for health care in the United States, community rating is where everyone within a defined geographic area pays the same premium, the consequence of which is that people who have less illness support people who have more illness in a given year. Experience rating is where everyone in an organizational group (employer group) pays the same premium, the consequence of which is that the group rate tends to be cheaper than the community rate. Total expected health care costs for one type of group may be lower or higher depending upon the experience rated group. For example, miners would likely have increased health risks compared to bankers so bankers might pay a lower premium. Small group market plans are community rated under the ACA. In California, almost all of the small group market is community rated and in the large group market, experience rated groups account for roughly 71% of total covered enrollees. So this means that those whose experience rating is better (lower health care costs) will take advantage of opportunities to join AHP/MEWAs while those with higher health care costs will remain in the small group. If the risk in the small group becomes too high and premium rates rise too much fewer and fewer small business will seek coverage in this market.
   
8. Enforcement issues. At both the federal and state level monitoring and enforcement of AHP/MEWAs has been challenging. In comments responding to the Trump Administration rule, some raised concerns about minimal oversight by DOL. While there is a fine of $1,000 per day if AHPs do not file or file incomplete information, there is no evidence DOL has ever used this authority. According to a 2004 General Accounting Office (GAO) report, during scams in 2000’s, DOL relied mostly on states to issue cease and desist orders on fraudulent MEWAs. A 2007 GAO report indicates DOL had a ratio of one employee conducting oversight or enforcement activities for over 8,000 plans. At the state level, four self-insured or partially self-insured MEWAs have been grandfathered in under rules from the 1990s: Group Insurance Trust of the California Society of Certified Public Accountants; Printing Industries Benefit Trust; United Agricultural Employee Welfare Benefit Plan and Trust; and, Western Growers Assurance Trust. However, data on the CDI website suggest there are additional self-insured MEWAs in operation today. With regard to fully insured MEWAs, three have registered. However, many more have been reported on both CDI and DMHC websites. In addition, the approximately 150,000 individuals covered through these arrangements in 2019 has grown to over 200,000 in a four-year period.
   
9. Related legislation. AB 2072 (Weber) extends the authority for an association of employers that sponsors a fully insured MEWA that registered with DMHC on or before June 1, 2022 to offer large group plan contracts to small employer members employed in the biomedical industry in California from January 1, 2026, to January 1, 2033. Requires on or before June 30, 2032, the DMHC to provide the health policy committees of the Legislature required filings, and to provide a recommendation to the Legislature as to whether any MEWAs that have registered with DMHC should cease to be operative or whether they should remain operative based on compliance with the law. AB 2072 is set to be heard in this committee on July 3, 2024.
   
10. Prior legislation. SB 718 (Bates, Chapter 736, Statutes of 2021) authorizes an association of employers to offer a large group health plan contract or health insurance policy to small group employer members in the biomedical industry if the association is headquartered in California, was established before March 23, 2010, and in continued existence as a bonafide association that may act as an employer, as specified.
    
    SB 255 (Portantino, Chapter 725, Statues of 2021) authorizes an association of employers to offer a large group health plan contract or health insurance policy if certain conditions are met, including the association was established prior to March 23, 2010, provides an equivalent to or greater level of coverage to the platinum level offered through Covered California and essential health benefits, and that it includes coverage for job categories on a project-by-project basis for one or more participating employers, for at least 101 employees.
    

SB 129 (Pan, Chapter 241, Statutes of 2019) requires annual health plan and insurer enrollment reporting to include enrollment data for products sold inside and outside of Covered California, any other business lines, and MEWAs; and requires CDI and DMHC to publicly report annual enrollment data no later than April 15th of each year.

SB 1375 (Hernandez, Chapter 700, Statutes of 2018) requires the status of each distinct member of an association to determine whether that member’s association coverage is individual, small group, or large group health coverage. Amends existing law that requires health coverage through an association that is not related to employment to be considered individual coverage, by deleting a reference to federal regulations.

1. Support. This bill’s sponsor, ACEC, writes that ACEC California represents nearly 600 engineering and land surveying firms and over 25,000 professionals who are involved in all aspects of the design, construction, and repair of California’s residential, commercial, industrial, and public works infrastructure. ACEC California exists in a federation within the larger ACEC organization, which represents 600,000 design professionals and 6,000 design firms nationwide; 87% of ACEC membership are small businesses with fewer than 100 employees. In 1965, ACEC created the Life/Health Trust (LHT) so that employees of ACEC’s small business membership could have access to affordable, high-quality health insurance. The LHT has continuously offered these policies in every state and D.C. and as of January 2024, nearly 11,000 Californians receive their health insurance through the LHT. Without this bill, beginning January 1, 2025, employees of ACEC California’s small business members will lose access to the LHT and be forced to look for coverage elsewhere. This will immediately and significantly increase their monthly healthcare expenses and will put small design firms at a competitive disadvantage to large firms – which can more easily negotiate with insurers for quality coverage at an affordable rate – both when bidding on public works projects and also when attracting talent.
   
2. Policy comments.
   1. Door closed. SB 255 and SB 718 grandfathered some existing AHP/MEWAs who met the requirements of those laws, registered, and were approved by the DMHC and CDI. ACEC doesn’t meet the same qualifications outlined in those laws and unlike those MEWAs, the MEWA is not headquartered in California. Additionally, the passage of a third law to “grandfather” in another AHP/MEWA surely will invite others to make a case for special treatment.
      
   2. More information is needed. Initially, a sunset date was placed on the authority under SB 718 to give policymakers time to assess potential negative impacts on California’s insurance market. At present, it appears the AHP/MEWA market is growing and requires more attention from regulators and an additional AHP/MEWA, the sponsor of this bill, is now seeking authority to continue. Policymakers need more information to determine if there are risks with continuing to authorize these arrangements.
      
3. Amendments. This bill should be amended to require regulators to analyze AHP/MEWA and assess their impact on California’s small group insurance market. The sunsets established in this bill and AB 2072 should be aligned. Additionally, authority at CDI does not appear to be needed and as such that authority should be struck from this bill.

SUPPORT AND OPPOSITION:

Support: American Council of Engineering Companies of California (sponsor)
4Creeks, INC.

Aliquot
ArcSine Engineering
Associated Transportation Engineers
Aurum Consulting Engineers
Base Consulting
Bethel Engineering
BKF Engineers
Blackburn Consulting
Bowman & Williams
Brooks Ransom Associates
Buehler Engineering
C2G / Civil Consultants Group, Inc.
Cabrinha, Hearn & Associates
California & Nevada Civil Engineers and Land Surveyors Association, INC.
California Geotechnical Engineers Association
Capo Projects Group
CE 2 Corporation
Christian Wheeler Engineering
Civil Engineering Associates
CMAG Engineering
Coleman Engineering
Cornerstone Earth Group
Cornerstone Structural Engineering

CriticalArc

Cullen-Sherry & Associates, INC.
Degenkolb Engineers
DES Architects + Engineers
Elevate Environmental Consultants
Fargen Surveys
Forell Elsesser Engineers

Geotechonologies, INC.
Grice Engineering
Groza Construction
Guida Surveying INC.
Hale Engineering
Hanagan Land Surveying
HD Geosolutions
HMH Engineers
Hogan Land Services
Howard Carter Associates
Ifland Engineers

Inland Foundation Egineering
International Bridge Technologies
iWalk, INC.
Jackson & Sands Engineering
Jensen Design & Survey
Joseph C. Truxaw and Associates, INC.
Kurt Fischer Structural Engineering
Kyler Engineering
Lane Engineers
Mesiti-miller Engineering, INC.
Michael K. Nunley & Associates, INC.
Mid Pacific Engineering, INC.
MNS Engineers

Monterey Bay Engineers, INC.
MSO Technologies, INC.
Nasland Engineering
North Coast Engineering
Owens Design

Pacific Crest Engineering

Pacific Engineering & Consulting, INC.
Polaris Land Surveying, INC.
Quad Knopf, INC.
R & S Tavares Associates
Rasmussen Land Surveying, INC.

RGF Engineering, INC.
Rinne & Peterson, INC.
RKA Consulting Group
Romig Engineers
RRM Design Group
Sharrah Dunlap Sawyer, INC.
Talas Engineering
Tanner Pacific, INC.
Towill
TRC Parkitects
Watry Design, INC.

West Yost
Whitson Engineers
Wilson Ihrig
Yamabe and Horn Engineering, INC.

Yeh and Associates, INC.
ZT Consulting Group

Oppose: None received

-- END --

Date of Hearing: May 8, 2024

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 2434

Author:(Grayson) – As Amended Ver:April 18, 2024

Urgency: No State Mandated Local Program: Yes Reimbursable: No

SUMMARY:

This bill authorizes an association of employers to offer a large group health plan or health insurance policy to small group employer members of the association if the association was established before January 1, 1966 and sponsors a multiple employer welfare arrangement (MEWA) that covers employees of an association member in the engineering, surveying, or design industry, among other conditions. The provisions of this bill are repealed on January 1, 2029.

FISCAL EFFECT:

Minor and absorbable costs to the Department of Managed Health Care (DMHC) and Department of Insurance.

COMMENTS:

1. Purpose. This bill is sponsored by the American Council of Engineering Companies (ACEC), California. According to the author:

ACEC represents California’s engineering land surveying, and design firms and exists in a federation with ACEC chapters in every state and under the national ACEC parent organization. In 1965, ACEC created the Life/Health Trust (LHT), which provides a way for ACEC’s small business members to secure high value, high quality healthcare. Although in existence since 1965, the LHT was not grandfathered in at the time of SB 1375 and will no longer be allowed to offer coverage to California employees of firms with under 100 employees beyond 2024. This will have a profound impact on each individual LHT enrollee’s healthcare expenses. AB 2434 will create a specific exemption for the LHT akin to those granted in 2021, allowing the LHT to continue serving small businesses beyond 2024. The exemption will include certain guardrails, ensuring that the coverage provided to these small member firms is in line with the ACA requirements.

1. Background. Association Health Plans (AHPs) are a type of MEWA established or maintained to provide insurance coverage for medical, surgical, hospital care, or other benefits in the event of sickness. AHPs are insurance arrangements that allow small businesses, associations, and self-employed workers to organize together to purchase health care coverage, potentially obtaining lower-priced coverage by spreading risk and negotiating on behalf of a larger set of enrollees. AHPs have long been offered and regulated in the state of California. California law established requirements for small group reform that applied to AHPs, including criteria for guaranteed issue, standard rating rules, defined risk corridors, specific age bands, and the number of geographic regions for the small group insurance market. In 2010, the federal Affordable Care Act changed the rating rules and benefit coverage requirements in the individual and small group markets, and led to the establishment of Covered California. Through Covered California, individuals and employees of participating small businesses can enroll in subsidized and unsubsidized health coverage.
2. Related Legislation.

AB 2072 (Weber) deletes the sunset from SB 718, below. AB 2072 is pending in this committee.

AB 2063 (Maienschein) extends the sunset of two pilot programs authorized by DMHC under which providers may undertake risk-bearing arrangements with a voluntary employees’ beneficiary association with enrollment of more than 100,000 lives, or a trust fund that is a welfare plan and a multiemployer plan with enrollment of more than 25,000 lives, for independent periods of time from January 1, 2022, through December 31, 2025, if certain criteria are met. AB 2063 is pending in this committee.

1. Prior Legislation.
   
   SB 718 (Bates), Chapter 736, Statutes of 2021, was similar to this bill, but applied to an association member in the biomedical industry with operations in California. SB 718 sunsets on January 1, 2026.
   
   SB 1375 (Hernandez), Chapter 700, Statutes of 2018, specifies the status of each distinct member of an association determines whether that member’s association coverage is individual, small group, or large group health coverage. SB 1375 also prohibits employer group health plans and employer group health benefit plans from being issued, marketed, or sold to a sole proprietorship or partnership without employees, and requires that only individual health care service plans and individual health benefit plans be sold to any entity without employees.

Analysis Prepared by: Allegra Kim / APPR. / (916) 319-2081

Date of Hearing: April 16, 2024

ASSEMBLY COMMITTEE ON HEALTH

Mia Bonta, Chair

ABPCA Bill Id:AB 2434

Author:((Grayson) – As Amended Ver:March 11, 2024

SUBJECT: Health care coverage: multiple employer welfare arrangements.

SUMMARY: Authorizes an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with Employee Retirement Income Security Act of 1974 (ERISA), if certain requirements are met, including that the association was established before January 1, 1966, and is the sponsor of a multiple employer welfare arrangement (MEWA), and that the contract or policy includes coverage of employees of an association member in the engineering, surveying, or design industry. Specifically, this bill:

1. Authorizes an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with the ERISA, as amended, if all of the following requirements are met:
   1. The association was established prior to January 1, 1966, has been in continuous existence since that date, and is a bona fide association or group of and the association is the sponsor of a MEWA;
   2. The MEWA is fully insured as described, and is in full compliance with all applicable state and federal laws;
   3. The MEWA has offered a large group health care service plan contract or insurance policy since January 1, 2012, in connection with an employee welfare benefit plan under ERISA;
   4. The large group health plan contract or insurance policy offers to employees a level of coverage having an actuarial value equivalent to, or greater than, the platinum level of coverage, and provides coverage for essential health benefits (EHBs), as specified;
   5. The large group health plan contract or insurance policy includes coverage of common law employees, and their dependents, who are employed by an association member in the engineering, surveying, or design industry and whose employer has operations in California; the large group health plan or insurer offers only fully insured benefits through an insurance contract with a health plan licensed by the Department of Managed Health Care (DMHC) or health insurer licensed by the California Department of Insurance (CDI);
   6. Association members purchasing health coverage have a minimum of two full-time common law employees and are current employer members of the association sponsoring the MEWA. Employer members of the association subsidize employee premiums by at least 51%;
   7. The association is an organization with business and organizational purposes unrelated to the provision of health care benefits and existed prior to the establishment of the MEWA offering the employee welfare benefit plan;
   8. The participating member employers have a commonality of interests from being in the same industry, unrelated to the provision of health care benefits;
   9. Membership in the association is open solely to employers, and the participating member employers, either directly or indirectly, exercise control over the employee welfare benefit plan, the MEWA, and the large group health plan contract or insurance policy, both in form and substance;
   10. The large group health plan contract or insurance policy is treated as a single-risk-rated contract that is guaranteed issued and renewable for member employers, as well as their employees and dependents, as specified;
   11. The MEWA at all times covers at least 101 employees; and,
   12. The association and the MEWA file applications for registration with the DMHC or CDI on or before June 1, 2025.
2. Requires an association and MEWA that timely register with the DMHC or CDI prior to June 1, 2025, and that are found to be in compliance with this bill, to annually file evidence of ongoing compliance with this bill with the DMHC or CDI, in a form and manner set forth by the DMHC or CDI.
3. Specifies that an association and MEWA that have registered with DMHC or CDI and fails to show ongoing compliance in their annual filing is subject to the restrictions in existing law (prohibiting the association from offering a large group contract or policy).
4. Prohibits on or after June 1, 2025, a health plan from marketing, issuing, amending, renewing, or delivering large employer health plan coverage or policy to any association or MEWA that provides any benefit to a resident in this state unless the association and MEWA have registered with the DMHC or CDI.

EXISTING FEDERAL LAW:

1. Establishes, pursuant to federal law, ERISA, which sets minimum standards for most voluntarily established pension and health plans in private industry, including Taft-Hartley Multi-Employer Health and Welfare Plans. Exempts these plans from state insurance regulation. [29 United States Code (U.S.C.) §1144]
2. Defines, in federal law, the terms “employee welfare benefit plan” and “welfare plan” to mean any plan, fund, or program which established or maintained by an employer or by an employee organization, or by both, to the extent that such plan, fund, or program was established or is maintained for the purpose of providing for its participants or their beneficiaries, through the purchase of insurance or otherwise, the following: a) medical, surgical, or hospital care or benefits, or benefits in the event of sickness, accident, disability, death or unemployment, or vacation benefits, apprenticeship or other training programs, or day care centers, scholarship funds, or prepaid legal services; or, b) any benefit, as described (other than pensions on retirement or death, and insurance to provide such pensions). [29 U.S.C. §1002(1)]
3. Defines in federal law, MEWA to mean an employee welfare benefit plan, or any other arrangement (other than an employee welfare benefit plan), which is established or maintained for the purpose of offering or providing any benefit in 2) above to the employees of two or more employers (including one or more self-employed individuals), or to their beneficiaries, as specified. [29 U.S.C. §1002(1)]
4. Establishes the federal Patient Protection and Affordable Care Act (ACA), which enacts various health care coverage market reforms including the availability of health insurance exchanges, federal financial assistance in the form of premium assistance or cost sharing reductions to specified eligible individuals, and coverage of EHBs. [42 U.S.C. 300gg, et seq.]

EXISTING STATE LAW:

1. Establishes, in state government, the California Health Benefit Exchange, referred to as Covered California, as an independent public entity not affiliated with an agency or department, and requires Covered California to compare and make available through selective contracting health insurance for individuals and small business purchasers as authorized under the ACA. [Government Code §100500-100522]
   
2. Establishes DMHC to regulate health plans under the Knox-Keene Health Care Service Plan Act of 1975 (KKA) and CDI to regulate health insurers. [Health and Safety Code (HSC) §1340, et seq., and Insurance Code (INS) §106, et seq.]
   
3. Permits the DMHC Director to exempt from the KKA any class of persons or plan contracts if the DMHC Director finds the action to be in the public interest and not detrimental to the protection of subscribers, enrollees, or persons regulated under the KKA, and that the regulation of the persons or plan contracts is not essential to the purposes of the KKA. [HSC § 1343]
   
4. Defines a health plan as:
   
   1. Any person who undertakes to arrange for the provision of health care services to subscribers or enrollees, or to pay for or to reimburse any part of the cost for those services, in return for a prepaid or periodic charge paid by or on behalf of the subscribers or enrollees; or,
   2. Any person, whether located within or outside of California, who solicits or contracts with a subscriber or enrollee in California to pay for or reimburse any part of the cost of, or who undertakes to arrange or arranges for, the provision of health care services that are to be provided wholly or in part in a foreign country in return for a prepaid or periodic charge paid by or on behalf of the subscriber or enrollee. [HSC § 1345]
5. Requires health coverage through an association that is not related to employment to be considered individual coverage and the status of each distinct member of an association to determine whether that member’s association is individual, small group, or large group health insurance coverage. [HSC §1357.503 and INS §10753.05]
6. Prohibits employer group health benefit plans from being issued, marketed, or sold, directly or indirectly through any arrangement, to a sole proprietorship or partnership without employees. Requires only individual health benefit plans to be sold to any entity without employees. Revises the definition of eligible employee for purposes of all small employer health plan contracts and health insurance policies to exclude sole proprietors or their spouses, and partners or their spouses. [HSC §1357 and INS §10755]
7. Authorizes an association of employers to offer a large group health plan contract or health insurance policy to small group employer members of the association, consistent with the ERISA, if all of the following requirements are met:
   1. The association is headquartered in California, was established prior to March 23, 2010, has been in continued existence since, and is a bona fide association or group of employers that may act as an employer under ERISA. The association is the sponsor of a MEWA, and the MEWA is fully insured, headquartered in California, and is in full compliance with all applicable state and federal laws;
   2. The MEWA has offered a large group health plan contract or health insurance policy since January 1, 2012, in connection with an employee welfare benefit plan;
   3. The large group health plan contract or insurance policy offers to employees a level of coverage having an actuarial value greater than or equivalent to the platinum level of coverage available through Covered California and covers EHBs, as specified;
   4. The large group health plan contract or insurance policy includes coverage of common law employees, and their dependents, who are employed by an association member in the biomedical industry and whose employer has operations in California;
   5. The large group health plan contract or insurance policy offers only fully insured benefits through an insurance contract with an insurance carrier licensed by CDI or with a health maintenance organization licensed by DMHC;
   6. Association members purchasing health coverage have a minimum of four full-time common law employees and are current employer members of the association sponsoring the plan. Employer members subsidize employee premiums by at least 51%;
   7. The association is an organization with business and organizational purposes unrelated to the provision of health care benefits and existed prior to the establishment of the MEWA offering the employee welfare benefit plan;
   8. The participating employers have a commonality of interests from being in the same industry, unrelated to the provision of health care benefits;
   9. Membership in the association is open solely to employers, and the participating employers, either directly or indirectly, exercise control over the employee welfare benefit plan, the large group health plan contract or insurance policy, both in form and substance;
   10. The large group health plan contract or insurance policy is treated as a single-risk-rated contract that is guaranteed issued and renewable for member employers, as well as their employees and dependents. An employee or dependent is not charged premium rates based on health status and is not excluded from coverage based upon any preexisting condition. Employee and dependent eligibility are not directly or indirectly based on health status or claims of any person;
   11. An employer otherwise eligible is not excluded from participating in a MEWA, or offering or renewing the large group health plan contract or insurance policy based on health status or claims of any employee or dependent;
   12. The MEWA at all times covers at least 101 employees; and,
   13. The association and MEWA files an application for registration with the DMHC or CDI on or before June 1, 2022.
8. Prohibits, on or after January 1, 2022, a health plan or insurer from marketing, issuing, amending, renewing, or delivering large employer health care coverage to a MEWA that provides any benefit to a resident of California unless the MEWA is registered and complies with 10) above, or has an application pending. Requires DMHC or CDI to determine whether the MEWA is in compliance. Sunsets on January 1, 2026. [HSC §1357.503 and INS §10753.05]

FISCAL EFFECT: Unknown. This bill has not yet been analyzed by a fiscal committee.

COMMENTS:

1. PURPOSE OF THIS BILL. According to the author, the American Council of Engineering Companies California (ACEC) represents California’s engineering land surveying, and design firms and exists in a federation with ACEC chapters in every state and under the national ACEC parent organization. In 1965, ACEC created the Life/Health Trust (LHT), which provides a way for ACEC’s small business members to secure high value, high quality healthcare. Although in existence since 1965, the LHT was not grandfathered in at the time of SB 1375 (Hernandez), Chapter 700, Statutes of 2018, and will no longer be allowed to offer coverage to California employees of firms with under 100 employees beyond 2024. This will have a profound impact on each individual LHT enrollee’s healthcare expenses. This bill will create a specific exemption for the LHT akin to those granted in 2021, allowing the LHT to continue serving small businesses beyond 2024. The author concludes that the exemption will include certain guardrails, ensuring that the coverage provided to these small member firms is in line with the ACA requirements.
2. BACKGROUND.
   1. Association Health Plans (AHPs). The California Health Care Foundation (CHCF) in a March 2021 Issue Brief writes that under federal law, AHPs are a type of MEWA established or maintained to provide insurance coverage for medical, surgical, hospital care, or other benefits in the event of sickness. AHPs are insurance arrangements that allow small businesses, associations, and self-employed workers to organize together to purchase health care coverage, potentially obtaining lower-priced coverage by spreading risk and negotiating on behalf of a larger set of enrollees. AHPs have long been offered and regulated in the state of California. California law established requirements for small group reform that applied to AHPs, including criteria for guaranteed issue, standard rating rules, defined risk corridors, specific age bands, and the number of geographic regions for the small group insurance market. In 2010, the ACA changed the rating rules and benefit coverage requirements in the individual and small group markets, and led to the establishment of Covered California. Through Covered California, individuals and employees of participating small businesses can enroll in subsidized and unsubsidized health coverage.

In 2018, according to CHCF, efforts to unwind key provisions of the ACA included the U.S. Department of Labor (DOL) new regulation for AHPs that made it easier for small employers to organize for the purpose of accessing health insurance typically available only to large groups. Proponents of the DOL rule argued that AHPs promote competition in increasingly consolidated insurance markets and provide more affordable options in the face of ever-escalating and unaffordable health insurance premiums. By allowing a more restrictive benefit design, such plans could also be attractive to small groups with a lower-risk profile. Such groups could design products that do not cover the EHBs as required for individual and small group plans under the ACA but instead comply with less stringent ERISA consumer protections. Opponents of the DOL rule argued that such plans would create adverse selection by driving higher-risk individuals into the state or federal health insurance marketplace options, increasing costs and ultimately undermining the stability of those risk pools. Premiums for the small group market are determined by a community rating methodology whereby the claims experience across the small group segment is pooled to determine health insurance premiums and annual rate increases.

According to a January 2018 paper authored by the Center on Health Insurance Reforms at Georgetown University, the primary purpose of the DOL rule is to allow more groups of small businesses and self-employed individuals to form AHPs so that they can offer coverage that is regulated under federal law as large-group coverage, and avoid ACA requirements such as EHBs, premium rating restrictions, the single risk pool requirement and risk adjustment. At that time, an analysis by Avalere Health indicated that individual and small group markets would see premiums rise, over a five-year period, 2.7% to 4% in the individual market and .1% to 1.9% in the small group market relative to current law because healthier enrollees would shift into AHPs. Avalere estimated 2.4 million to 4.3 million would switch to AHPs. In 2018, Covered California released a report indicating that this policy change along with another one related to short-term policies could cause an increase in premiums in 2019 of 0.3% to 1.3%. Together with the elimination of the individual mandate penalties (it should be noted that California subsequently enacted a state individual mandate), premium costs could go up by 12% to 32% in total in 2019.

• 1. SB 1375. In response to the 2018 DOL rule, California enacted SB 1375 to prohibit fully-insured MEWA from selling large group coverage to small employers. In California, small group businesses include any business with at least one but no more than 100 full time employees. SB 1375 protects the state’s individual and small group markets from potential adverse selection by specifying that the status of each distinct member of an association determines whether that member’s association coverage is individual, small group, or large group health coverage. In other words, if a member in the association is a small group, then the member would need to meet existing small group requirements in California law (i.e., small group premium rating restrictions).

The DMHC issued a 2019 All Plan Letter (APL) to remind health plans, solicitors, brokers and others that in California, group coverage may not be sold to individual subscribers directly or “indirectly through any arrangement.” California law significantly limits the extent to which employers and individuals may join together to purchase health care coverage as an association. As such, notwithstanding the DOL rule, individuals (including sole proprietors without employees) may purchase individual coverage only, regardless of whether they are in an association. Similarly, small employers may purchase small group coverage only, regardless of whether that coverage is sold through an association.

• 1. SB 1375 Exemptions. In 2021, two bills were enacted to create two narrow exceptions to the general rule in SB 1375 that plans are barred from selling large group coverage to small employers and individuals through a MEWA. SB 255 (Portantino), Chapter 725, Statutes of 2021, exempts one MEWA that provides health coverage for freelance filming crews in the television commercial production industry. Eligibility requirements of the large group contract is required to provide coverage for employees and their dependents, who are employed in designated job categories on a project-by-project basis for one or more employers with no single project exceeding six months in duration. SB 718 (Bates), Chapter 736, Statutes of 2021, exempts a MEWA that provides health coverage for individuals in the biomedical industry. SB 718 requires the large group health plan to include coverage of common law employees, and their dependents, who are employed by an association member in the biomedical industry and whose employer has operations in California. The provisions related to SB 718 will sunset on January 1, 2026.
  2. Recent Proposed Federal Rule. Late last year, the DOL issued a proposed rule that would rescind the 2018 DOL rule designed to expand the formation and use of AHPs. According to a recent Health Affairs article, in the preamble to its proposed rule, DOL describes its “extensive experience” with unscrupulous promoters and operators of MEWAs. Compared to traditional health insurers, MEWAs have disproportionately suffered from financial mismanagement and abuse, leaving enrollees and providers with significant financial liabilities. Under ERISA, an association can only sponsor an employee health benefit plan when it is acting as an employer. Such plans can only be offered through genuine employment-based arrangements. In its proposed rule, DOL argues that the 2018 DOL rule loosening the business purpose, commonality of interest, and working owner standards do not align with the text and intent of ERISA. The agency also notes that the 2018 DOL rule would have increased adverse selection in the individual and small-group insurance markets. DOL further notes that the 2018 DOL rule would have enabled AHPs to offer coverage not subject to the ACA’s EHB standard, enabling them to offer only “skinny” plans that leave workers underinsured. These federal rules are pending.

1. SUPPORT. ACEC California, sponsor of this bill, seeks to permit the ACEC LHT to continue offering health insurance coverage beyond 2024 to ACEC small business members in California. ACEC California represents nearly 600 engineering and land surveying firms and over 25,000 professionals who are involved in all aspects of the design, construction, and repair of California’s residential, commercial, industrial, and public works infrastructure. ACEC California exists in a federation within the larger ACEC organization, which represents 600,000 design professionals and 6,000 design firms nationwide; 87% of ACEC membership are small businesses with fewer than 100 employees. In 1965, ACEC created the LHT so that employees of ACEC’s small business membership could have access to affordable, high-quality health insurance. The LHT has continuously offered these policies in every state and D.C. and as of January 2024 nearly 11,000 Californians receive their health insurance through the LHT. Without this bill, beginning January 1, 2025, employees of ACEC California’s small business members will lose access to the LHT and be forced to look for coverage elsewhere. The sponsors conclude that this will immediately and significantly increase their monthly healthcare expenses and will put small design firms at a competitive disadvantage to large firms, which can more easily negotiate with insurers for quality coverage at an affordable rate, both when bidding on public works projects and also when attracting talent.
2. RELATED LEGISLATION.
   1. AB 2072 (Weber) deletes the sunset from SB 718. AB 2072 is pending in Assembly Health Committee.
   2. AB 2063 (Maienschein) extends the sunset of two pilot programs authorized by DMHC under which providers may undertake risk-bearing arrangements with a voluntary employees’ beneficiary association with enrollment of more than 100,000 lives, or a trust fund that is a welfare plan and a multiemployer plan with enrollment of more than 25,000 lives, for independent periods of time beginning no earlier than January 1, 2022, to December 31, 2025, inclusive, if certain criteria are met. AB 2063 is pending in Assembly Health Committee.
3. PREVIOUS LEGISLATION.
   1. SB 718 authorizes, until January 1, 2026, an association of employers to offer a large group health plan contract or insurance policy to small group employer members of the association consistent with ERISA if certain requirements are met, including that the association is the sponsor of a MEWA that has offered a large group health plan contract or insurance policy since January 1, 2012, in connection with an employee welfare benefit plan under ERISA, provides a specified level of coverage, and includes coverage for common law employees, and their dependents, who are employed by an association member in the biomedical industry with operations in California.
   2. SB 255 authorizes an association of employers to offer a large group health plan contract or insurance policy consistent with ERISA if certain requirements are met, including that the association is headquartered in this state, is a MEWA as defined under ERISA, and was established as a MEWA prior to March 23, 2010, and has been in continuous existence since that date. Includes coverage for employees, and their dependents, who are employed in designated job categories on a project-by-project basis for one or more participating employers, with no single project exceeding 6 months in duration, and who, in the course of that employment, are not covered by another group health care service plan contract or insurance policy in which the employer participates. 
   3. SB 129 (Pan), Chapter 241, Statutes of 2019, requires annual health plan and insurer enrollment reporting to include enrollment data for products sold inside and outside of Covered California, any other business lines, and MEWAs; and requires DMHC and CDI to publicly report annual enrollment data no later than April 15th of each year.
   4. SB 1375 deletes sole proprietors, partners of a partnership, and the spouses of sole proprietors and partners from the definition of “eligible employee” and provides that, with respect to a sole proprietorship that consists only of the sole proprietor and his or her spouse, or a partnership that consists solely of partners and their spouses, that the sole proprietor or the partner, as applicable, and the spouses of those persons, are not considered employees for purposes of determining eligibility for small employer coverage. Prohibits employer group health plans and employer group health benefit plans from being issued, marketed, or sold to a sole proprietorship or partnership without employees directly or indirectly through any arrangement, and requires that only individual health care service plans and individual health benefit plans be sold to any entity without employees. Revises the definition of a small employer to include any small employer, as defined, who purchases coverage through any arrangement, except as specified.
4. SUGGESTED AMENDMENTS. As this bill seeks an exemption to existing law enacted in response to actions at the federal level to undermine the protections of the ACA, the committee may wish to consider including a sunset on this bill to allow regulators an opportunity to analyze and report to the Legislature on the impacts to the health care insurance market and compliance with existing law.

REGISTERED SUPPORT / OPPOSITION:

Support

Aliquot
American Council of Engineering Companies of California
ArcSine Engineering
Associated Transportation Engineers
Aurum Consulting Engineers
Base Consulting
Bethel Engineering
BKF Engineers
Blackburn Consulting
Bowman & Williams
Brooks Ransom
Buehler
C2G/Civil Consultants Group, Inc.
Cabrinha. Hearn & Associates
California Geotechnical Engineers Association
Capo
CE2 Corp
Christian Wheeler
Civil Engineering Associates
CMAG Engineering
Coast Surveying, INC.
Coleman Engineering
Cornerstone Earth Group
Cornerstone Structural Engineering
Degenkolb Engineers
DES Architects + Engineers
Elevate Environmental Consultants
Fargen Surveys
Forell Elsesser Engineers
Grice Engineering
Groza Construction
Guida Surveying INC.
Hanagan Land Surveying
HD Geosolutions
HMH Engineers
Hogan Land Services
Howard Carter Associates
Ifland Engineers
International Bridge Technologies
IWalk, INC.
Jackson & Sands Engineering
Joseph C. Truxaw and Associates, INC.
Kurt Fischer Structural Engineering
Kyler Engineering
Lane Engineers
Mesiti-Miller Engineering, INC.
Michael K. Nunley & Associates, INC.
Mid Pacific Engineering, INC.
MNS Engineers
MSO Technologies, INC.
North Coast Engineering
Owens Design
Polaris Land Surveying, INC.
QK INC.
R&s Tavares Associates
Rasmussen Land Surveying, INC.
Rinne & Peterson, INC.
RKA Consulting Group
Romig Engineers
RRM Design Group
Sharrah Dunlap Sawyer, INC.
Talas Engineering
Tanner Pacific, INC.
Towill
TRC Parkitects
Watry Design, INC.
Whitson Engineers
Wilson Ihrig
Yamabe and Horn Engineering, INC.
ZT Consulting Group

Opposition

None on file.

Analysis Prepared by: Kristene Mapile / HEALTH / (916) 319-2097