Created by Jenny Peshut, University Staff Council Member
Self-insurance Model Proposed by Walker and his Appointees on the Group Insurance Board
The 2017 Group Insurance Board Membership is made up of 11 members, 6 voting members appointed by Walker, and 5 non-voting Ex-Officio appointments. See 2017 roster here. http://etf.wi.gov/boards/board_roster_gib.pdf . Under self-insurance, the state would pay for health care directly and take on the risk for claims, instead of paying premiums to 17 HMOs. This means that instead of paying health plans a monthly premium for coverage, the State will pay medical claims directly through third-party administrators.
- Currently the state worker health insurance program covers 250,000 state workers and their family members, nearly 100,000 of whom are in Dane County.
- Two different actuaries previously came up with differing opinions on whether that model would cost or save the state money. One consultant, Deloitte, said self-funding could cost the state $100 million. The other one, Segal, predicted the switch could save the state $42 million.
- Co-chairs of the Joint Finance Committee are concerned about the move to self-funding. See the December 12, 2016 letter to the Group Insurance Board here. The Joint Finance Committee will need to approve the plan before it can be enacted. http://www.thewheelerreport.com/wheeler_docs/files/1212jfc.pdf
- The Wisconsin Association of Health Plans, which represents many of the 17 HMOs, opposes self-insurance, saying it would disrupt the state’s regional health care systems, which own many of the HMOs.
- The Wisconsin Hospital Association, the Wisconsin Medical Society and a dozen other groups said the potential repercussions for the state, taxpayers, state employees, healthcare organizations and the Wisconsin economy are significant and could be far-reaching.
- In a memo sent to Walker from the state’s hospital and doctor associations, along with the health plans group, the Rural Wisconsin Health Cooperative, the Wisconsin Counties Association, the Cooperative Network and M3 Insurance said, the current state worker health benefits program “has been remarkably successful in using choice and competition to control costs, improve quality, and maintain financial stability and value for taxpayers,” they said.
- Health insurance companies in the state have warned against the move, arguing that it opens the state up to volatility in the cost of medical claims.
- “For years, Scott Walker tried to force a square self-insurance peg into a round state health plan hole, even switching consultant firms after the first report did not say what he wanted it to. Despite these efforts, nearly everyone — health care professionals, economists, program members and even the health insurance companies — collectively agreed that self-insurance is a risky scheme for Wisconsin,” Chris Taylor D-Madison.
- The Wisconsin Coalition of Annuitants has expressed their reservations about the proposal: Wisconsin Coalition of Annuitants write on Self Insurance Plan
- Wisconsin has one of the most competitive health insurance markets in the country, our premium increases have remained well below the national average and the current format of GHIP has kept costs down, saving the State $283 million over the last nine years despite efforts by legislative Republicans to shift more healthcare costs on employees. See URL below.
- We need to be concerned about job losses for the insurers excluded from the new system. Insurance companies would lose business – and perhaps cut jobs – if they lose the state employee portion of their customer base.
Finally, this is a plan developed by Governor Scott Walker’s office and his appointees on the Group Insurance Board. The University Staff Council urges you to contact the Joint Committee on Finance (JFC). They will be taking action on this matter sometime between now and May 2017.
The Honorable Alberta Darling, Co-Chair
Joint Committee on Finance
317 East, State Capitol
P.O. Box 7882
Madison, WI 53707-7882
The Honorable John Nygren, Co-Chair
Joint Committee on Finance
309 East, State Capitol
P.O. Box 8953
Madison, WI 53708-8953
UW Madison on Self insurance:
DOA Budget Office, for specifics of the budget: