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JFC rejects self-insurance, expects to find $63.9 million in savings

Monday, June 19, 2017   (0 Comments)
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June 16, Wisconsin Health News


The Joint Finance Committee unanimously rejected contracts to self-insure and regionalize the health plan for state and local employees Thursday, voting instead to direct the Group Insurance Board to find $63.9 million in savings.


That's more than the $60 million in general purpose revenue Gov. Scott Walker estimated a move to self-insurance would save in his 2017-19 budget. The increase is in part because of a miscalculation involving Affordable Care Act taxes, JFC Co-Chair Rep. John Nygren, R-Marinette, told reporters before the vote.


During the vote, Nygren said that while self-insurance could save money, the Legislature wasn't involved in the conversation about a potential move from the beginning and hasn't seen the data backing that conclusion.


"We have really no other answer than to say no," he said.


The savings called for by JFC would come through drawing down reserves at the Department of Employee Trust Funds by about $25.8 million, according to a motion unanimously approved by the committee.


Year-end reserves in 2016 were $144.4 million, which was about $18.4 million beyond the maximum benchmark set by the board, according to a Legislative Fiscal Bureau memo.


Lawmakers also expect GIB to find an estimated $22.7 million in "negotiation savings" with health plans.


The remaining $15.4 million would come from plan design changes, increasing the usage of health plan tiers that are allowed under state law and reducing reserves further pending a review of GIB policies. The motion from JFC leaders stipulates that total employee costs couldn't increase by more than 10 percent in calendar years 2017 and 2018.


Lawmakers also approved establishing five health plan tiers in state law rather than three. And they requested that the Joint Legislative Audit Committee direct the Legislative Audit Bureau to audit the health plan.


The approved motion would add four members to GIB, appointed by the leadership of each party in both legislative chambers. Under the motion, GIB would have to submit proposed changes to the health plan to JFC annually for approval.


"We think this is a good decision for the people of Wisconsin," JFC Co-Chair Sen. Alberta Darling, R-River Hills, told reporters before the vote.


Provisions of the 2017-19 budget are still subject to approval by the rest of the Legislature as well as Gov. Scott Walker's veto pen.


"Moving to self-insurance is a common sense conservative reform that would save taxpayer money without passing on costs to state workers," Tom Evenson, Walker's spokesman, wrote in an email. "Governor Walker will continue to advocate for conservative reforms like self-insurance that make the most sense for Wisconsin."


Wisconsin Association of Health Plans CEO Nancy Wenzel called JFC's decision "a vote for competition over consolidation.


"Wisconsin's health insurance market is the most competitive in the country," she said in a statement. "Committee members elected to stay with a proven winner for taxpayers and state employees."

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