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News: Legislative Updates

Hospitals, health plan association question self-insurance savings after Walker's State of the State

Monday, January 25, 2016  
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January 21, Wisconsin Health News


Gov. Scott Walker's suggestion during Tuesday's State of the State address that the state should reform how it administers healthcare for its employees and transfer the savings to public education is drawing criticism from hospitals and a health plan association, who question whether the proposal would actually cut spending.


"The governor is getting ahead of himself by banking on 'savings' from self-funding the State Group Health Program," said Phil Dougherty, senior executive officer for the Wisconsin Association of Health Plans.


The Group Insurance Board is considering, by 2017, transitioning to three regions with no more than two health plans per region. It's also preparing a request for proposal for shifting the state to a self-insurance model starting in 2018. Both options would save tens of millions of dollars, according to Segal Consulting. They would also decrease the number of plans in the program.


"Taking some of the best players off the field will increase the state's costs, lower healthcare quality and have consequences for Wisconsin's private insurance market and taxpayers," Dougherty said.


Wisconsin Hospital Association CEO Eric Borgerding pointed to a previous study commissioned by the state, which estimated switching to a self-insurance model could save money, or cost an additional $100 million.


"Wisconsin's current approach to state employee health insurance, which relies on competition among some of the highest performing, and Wisconsin based, health plans in the country, has a track record of strong performance," he said.


The Alliance of Health Insurers, which represents several insurers with national footprints, had no comment on Walker's State of the State remarks or the Group Insurance Board's self-insurance RFP.


Joint Finance Committee Co-Chair Rep. John Nygren, R-Marinette said the switch could potentially save money, but more information is needed. His committee must sign off on a self-insurance contract.


"I am skeptical of the plan and I have concerns, but it will make for an interesting conversation," Nygren said in a statement emailed to Wisconsin Health News. "The net effect to the taxpayer is my number one concern."


Walker spokeswoman Laurel Patrick shared Nygren's concern, but was unable to provide additional details on what specific reforms to the state employee health program the governor is targeting.


"Given the significant potential savings as identified by Segal Consulting, this is an area to consider for real reform and warrants further review," she said.

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