Insurance Glossary

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Insurance Term - Group Purchasing Arrangement

It is a wide array of arrangements in which two or more small employers purchase health insurance collectively, often through a common intermediary who acts on their collective behalf. Such arrangements may go by various names, including cooperatives, alliances or business groups on health. They differ from one another along a number of dimensions, including governance, functions, and status under federal and State laws across USA. Some are set up or chartered by States while others are entirely private enterprises. Some centralize more of the purchasing functions than others, including functions such as risk pooling, price negotiation, choice of health plans offered to employees, and various administrative tasks. Depending on their functions, they may be subject to different State and/or federal rules. For example, they may be regulated as Multiple Employer Welfare Arrangements (MEWAs). This is applicable only in USA.

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