STATE EMPLOYEE BENEFITS

Union, insurers concerned about self-insurance proposal for state employees

2013-10-02T06:00:00Z Union, insurers concerned about self-insurance proposal for state employeesDAVID WAHLBERG and MATTHEW DeFOUR | Wisconsin State Journal madison.com

State employees could see reduced health benefits and Madison-area HMOs would struggle financially if Wisconsin self-insured all state employees, representatives from the groups said Tuesday after Gov. Scott Walker discussed the idea with health care executives.

But self-insuring — paying benefits directly and assuming the risk, instead of buying insurance — can save money while maintaining strong benefits, an organization of self-insured employers said. One way is through wellness programs, which Wisconsin started for state employees this year.

The Walker administration is considering switching 236,000 state employees and family members from a competitive HMO model, in place since 1984, to a self-insured program like that used in at least 20 states.

A committee of the Group Insurance Board, which oversees state employee benefits, might take up the matter Oct. 11. The move could save money or cost the state more, consultants’ reports have said.

Marty Beil, executive director of the Wisconsin State Employees Union, told the State Journal that the state’s HMO model, which allows workers to choose among health plans, has kept health care costs down through competition.

“The only way blowing up this system could possibly save money would be to gut the quality of coverage available to the families of state employees,” Beil, a longtime Group Insurance Board member until last year, said in a statement. “That’s where this appears to be headed.”

Linda Hoff, president and CEO of Physicians Plus — one of six insurers in the Madison area that cover many state employees — said the shift could threaten some of the companies’ viability. Physicians Plus and two others are HMOs owned by health systems.

“It’s a big blow to all of us,” Hoff said during a meeting with the State Journal editorial board. “I don’t know if there’s a way to go down that path and preserve the provider-owned HMOs.”

A Walker spokesman declined to elaborate on the proposal, saying only that the governor received input Tuesday from health care providers and insurers about issues before the Group Insurance Board.

Just after noon, Walker tweeted: “Good meetings in the Capitol about how to provide quality and affordable health care to state employees.”

Lawyers for the state Department of Employee Trust Funds, which oversees employee benefits, are reviewing whether a shift to self-insurance would require action from the Legislature or if the Group Insurance Board could do it, said Lisa Ellinger, administrator for the division of insurance.

The board is composed of 11 members, including representatives from several state agencies and gubernatorial appointees.

Spokespersons for state Senate Majority Leader Scott Fitzgerald, R-Juneau, and Assembly Speaker Robin Vos, R-Rochester, said the legislators need more information before commenting on the

proposal.

“The speaker is always interested in ideas that saves taxpayers money,” said Vos spokeswoman Kit Beyer. “However, it appears that there needs to be more research on this idea.”

Sen. Mark Miller, D-Monona, said self-insuring could eliminate the competitive pressure that keeps prices and premiums low in south central Wisconsin.

A report by Deloitte consultants last year said Wisconsin could save $20 million — but might spend $100 million more — by switching to self-insurance.

A follow-up analysis by Deloitte this year said the move could save the state 4 percent to 5 percent a year, partly by avoiding a fee from the Affordable Care Act.

The same report said the state’s HMO model saves 4 percent to 5 percent a year and self-insurance could force some workers to find new doctors and pay a higher proportion of their medical bills.

The Wisconsin Association of Health Plans, which represents 10 HMOs, said self-insurance would increase the state’s health costs by $200 million, disrupt patient-provider relationships, create instability in the Medicaid program, increase financial risk to the state and result in the loss of nearly 1,000 jobs.

Employers that self-insure “want more control over their health benefit plans,” said Cheryl DeMars, president and CEO of The Alliance, a Madison-based cooperative of 180 self-insured private employers that purchase health care together.

Such employers reduce costs, in part by avoiding some state regulations that a program for state employees would still have to meet, but still provide strong benefits, DeMars said. In addition, they directly “reap the benefits of investments they make in wellness and health promotion,” she said.

Wisconsin started providing incentives this year for state employees to do health risk assessments and participate in wellness programs such as exercise classes.

Shifting state employees to self-insurance “would certainly be disruptive to the market,” DeMars said. “But there could be upsides and downsides to the disruption.”

Contact David Wahlberg at dwahlberg@madison.com or 608-252-6125; contact Matthew DeFour at mdefour@madison.com or 608-252-6144.

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