Scott Walker administration: No self-insurance triggers 10 percent jump in premiums

May 26--Refusing to self-insure state employees would trigger a 10 percent increase in health care premiums for 2018 -- 3 percent more than what Gov. Scott Walker's budget plans for, state officials said Friday.

And revised estimates released by the Walker administration also show the state would save about $43 million more than the $60 million figure the governor had touted in the past while trying to persuade lawmakers to approve his plan.

The announcement from top officials in Walker's administration is part of a renewed push to convince lawmakers to move forward with Walker's self-insurance proposal despite a promise from the state's budget committee to reject the idea.

"Self-insurance allows us to get a taxpayer savings of $103 million with no changes to benefits to state employees," said Department of Administration Secretary Scott Neitzel on Friday during a press conference with Walker's budget director Waylon Hurlburt and Deputy Insurance Commissioner J.P. Wieske.

The $103 million in savings includes the $60 million in general purpose revenue, a $22 million health insurer fee under the Affordable Care Act and a $21 million worth of premium increases that would not materialize if the state self-insured, according to Hurlburt.

Walker in his 2017-19 spending plan proposed switching about 236,000 state workers 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. The idea was one of the governor's most ambitious and contentious proposals this budget cycle.

Under Walker's plan, the state would pay benefits directly and assume the risk for losses instead of buying insurance from 18 HMOs. Self-insurance could save the state money or could cost more, according to consultants' reports.

The new projections also show annual deductibles would increase about 400 percent.

The public plea to revive the proposal comes days after the state's Group Insurance Board met and floated the idea of moving forward with self-insurance regardless of what the Legislature decides to do with Walker's proposal.

One way would be to divide the states into regions that insurers must cover and reducing the number of insurers, according to Wisconsin Public Radio.

Wieske said Friday it's unclear how much savings that plan would generate because it's unknown which insurers would participate.

Officials with the Group Insurance Board and the Division of Personnel Management also on Friday sent a letter to the Joint Finance Committee detailing consequences of not moving to a self-insurance model.

"This new information confirms that the current fully insured model will be much costlier than moving to a self-funded approach," the letter from GIB chairman Michael Farrell and DOA deputy administrator Stacey Rolston.

A spokeswoman and spokesman for the co-chairpersons of the Joint Finance Committee, which writes the state budget, did not immediately respond to a request for comment.

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