I have tested again in 1.8.1 with exactly the same situation above and It's seems to work. Now I get healed when I stand near that NPC. The problem was that the regeneration effect was too weak, as Mlakuss says, the effect's repeated quickly and then, the effect's reset every times. If you set a regeneration II, It'll works perfectly.
I tested that theory only on 1.8.1, but not on 14w28b, when I encountered that issue, because of a lack of time.
Command Blocker --> Your issue is resolved in 1.8.1 😛
I have tested again in 1.8.1 with exactly the same situation above and It's seems to work.
Now I get healed when I stand near that NPC. The problem was that the regeneration effect was too weak, as Mlakuss says, the effect's repeated quickly and then, the effect's reset every times.
If you set a regeneration II, It'll works perfectly.
I tested that theory only on 1.8.1, but not on 14w28b, when I encountered that issue, because of a lack of time.
Command Blocker --> Your issue is resolved in 1.8.1 😛