- Associated Press - Friday, May 26, 2017

MADISON, Wis. (AP) - Gov. Scott Walker’s administration hasn’t given up on his push to have the state directly pay for its workers’ health insurance instead of getting it through HMOs, telling Republican lawmakers who oppose the idea that the workers could face steep increases in premiums next year under the current system.

Department of Employee Trust Funds and Group Insurance Board officials sent a letter to the Legislature’s finance committee’s leaders Friday saying that new estimates from the state’s actuary show state employee premiums will probably increase by at least 10 percent next year under the current insurance model. The projections were based on 2016 trends and claims data.

As a result, staying with the current system would cost the state $231.5 million over the next two fiscal years, including $103.4 million in general purpose tax revenue. Moving to self-insurance would save that $231.5 million over the same period, Walker’s state budget director, Waylon Hurlburt, said at a news conference.

“(Self-insurance) is a good government reform,” Department of Administration Secretary Scott Nietzel said.

Walker has included provisions in the 2017-19 state budget that would move the state to a self-insurance model. Under a self-insurance model, the state would directly pay for health insurance for about 250,000 state workers and their families rather than purchase it through 17 HMOs. The state would assume the risk for covering medical claims.

The governor’s proposed budget relies on savings from such a move to fund salary increases for University of Wisconsin System workers and to increase funding for public schools. The administration negotiated self-insurance contracts and submitted them to the Legislature’s Joint Finance Committee for approval earlier this month.

Republican lawmakers, though, have been skeptical about shifting to self-insurance. They’re not convinced the promised savings will actually materialize. They’re also worried about taking on risk and how moving tens of thousands of customers to a new model would affect Wisconsin’s insurance industry.

The co-chairs of the finance committee, Rep. John Nygren of Marinette and Sen. Alberta Darling of River Hills, said this month that the panel will reject the contracts, essentially killing the plan.

Neither Nygren’s spokeswoman nor Darling’s spokesman immediately replied to emails seeking comment.

The Wisconsin Association of Health Plans, an advocacy organization for 10 health plans that currently cover state workers, said in a statement that the state’s premium increase projections are preliminary and are overblown. Over the last nine years, final premium increases averaged 3.7 percent. Premium rates rose 1.6 percent in 2017 after preliminary bids from providers showed a 5.4 percent increase


This story has been corrected to reflect that the governor’s administration estimates that moving to a self-insurance model would save $231.5 million over the next two fiscal years, not $134.4 million.


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