The board overseeing state worker health benefits declined to take action on self-insurance and other restructuring options Tuesday, as had been expected, saying discussion will continue in January.
“There is much complexity and volumes of information that relate to our consideration, and of course we are not taking these decisions lightly,” Michael Farrell, chairman of the Group Insurance Board, said in announcing the delay.
The board is considering a move to self-insurance, in which the state would pay for health care directly and take on the risk for claims, instead of paying premiums to 17 HMOs. Separately, the board is looking at requiring insurance companies to operate in one or more of four regions, instead of picking the counties in which they want to do business.
The $1.5 billion program covers 250,000 state workers and their family members, nearly 100,000 of whom are in Dane County.
Even a partial move to self-insurance would require approval from the state Legislature’s budget committee.
In a letter Monday to Farrell, the committee’s co-chairs said they are concerned that even establishing regions for insurers could impact the state’s health care system without saving money.
“A move to regionalization would create artificial government boundaries and essentially draw a map of coverage where Wisconsin already has viable, functioning marketplaces,” wrote Sen. Alberta Darling, R-River Hills, and Rep. John Nygren, R-Marinette. “Moving forward, we are requesting to meet with the (board) chairs to discuss this issue further.”
Farrell, when asked after Tuesday’s board meeting whether the legislators’ letter contributed to the decision to delay action, declined to comment.
Consultants have said moving to selfinsurance could cost $100 million a year — or save $42 million, largely by avoiding $18 million in Affordable Care Act fees, cutting $11 million in administrative costs and eliminating $11 million in insurance company profits.
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.
State workers make up about 15 percent of the state’s fully-insured health insurance market, in which insurers carry the risk.
In Dane County, the HMOs include Dean Health Plan, part of SSM Health; Group Health Cooperative of South Central Wisconsin; Physicians Plus, part of UnityPoint Health; and Unity, part of UW Health.
In open and closed sessions Tuesday, the insurance board considered seven restructuring options, four involving self-insurance to some degree and five giving the state more power to set insurance rates.
Most of the scenarios would require insurance companies to operate in regions.
Lisa Ellinger, director of the state Department of Employee Trust Funds’ Office of Strategic Health Policy, said that whatever happens, significant changes are on the way, including an increased emphasis on wellness programs and quality measures.
“The status quo is not presented here as an option,” Ellinger told the board Tuesday. “It was clear at the last meeting that this board feels like we’re paying too much for health insurance.”
Ellinger said in a memo to the board that ETF plans to change how rates are determined for state worker coverage.
Instead of having insurers submit bids and lower them if necessary to be assigned the lowest premiums for employees, the state plans to set rates for three premium tiers and have companies select the tiers at which to participate.
That change — along with another new requirement for three-year, instead of one-year, contracts — could give the state more leverage to reduce costs, Ellinger said.