Gov. Walker’s Risky Self-Insurance Scheme: More Chaos and Higher Costs
In a self-insurance model, the state is on the hook for the actual costs and liability of the health care covered employees receive.
Last week, a group of 11 individuals, all appointed by Governor Walker to the Group Insurance Board (GIB), almost unanimously voted to overhaul health care in Wisconsin by adopting a risky self-insurance scheme that will not only disrupt our entire health insurance market, but may end up costing taxpayers millions more.
The State of Wisconsin has one of the most competitive health insurance markets in the country, which is reflected in the Group Health Insurance Program (GHIP). Currently, the GHIP is composed of 17 health plans that provide more than 250,000 state and local government employees, retirees, UW employees and their dependents with health care. Under GHIP, Wisconsin funds state employee health insurance through premiums to a third party health insurer that covers costs and liabilities of all claims.
Insurers work with both local providers and the state to establish service areas that not only keep health care costs low, but also ensure high quality, accessible care. While some states around the country have seen their health care premiums skyrocket, Wisconsin’s rate increases have remained well below the national average and our current model has saved Wisconsin taxpayers nearly $283 million over the last nine years.
The uncertainty of self-insurance at a time when the future of the Affordable Care Act and the Medicaid system hang in the balance make this a very bad time for Wisconsin to pile on with further disruptions that could cost millions more, require people to change physicians, and disrupt localized, accessible health care networks.
But last week, the unelected GIB ignored all of this and nearly unanimously voted to plow ahead with self-insurance, dividing the state into four regions which will be served by only six insurers. In some regions, they propose just one insurer. If there’s one thing that health actuaries seem to agree on, it is that reducing competition in a health care market most certainly leads to increased health care costs.
With over 100,000 GHIP participants in Dane County alone, what does self-insurance mean for our community? Simply put, it means job losses, fewer health plan choices, fewer health care providers and most likely more money out of your pocket.
Not only will public employees again be asked to pony-up for more of their health care costs, but all Wisconsin taxpayers should be worried about what self-insurance means for the state’s coffers, for their own pocket books, and for their own health care. Taking 250,000 individuals out of Wisconsin’s health care market most definitely will impact the health care premiums, provider choices and health care access of everyone else who remains.
The state’s cash reserves are not even close to covering the potential risks of self-insurance, which, at a minimum, would require the state to triple its reserves. Some states that have moved to a self-insurance model, including North Carolina, underestimated the amount and costs of claims and experienced a $250+ million budget deficit due to unexpected claims. Compared to other states, Wisconsin has larger health insurance costs, partially due to our chronic disease condition rates being significantly higher. One bad year will force us to redirect money towards covering health care costs that could be going towards our k-12 schools, our roads and the UW System.
While the GIB voted to advance this proposal, the Joint Finance Committee has the ability to stop it. Whether you’re a public employee or not, this overhaul of Wisconsin’s health care system will affect us all. Contact your elected officials and tell them that Wisconsin cannot afford to roll the dice with our Governor’s political games and to remove his self-insurance proposal from the 2017-19 state budget.