Self-funding state insurance draws warnings for caution

CAPITOL NEWSLETTER
Matt Pommer • Wisconsin Newspaper Association

Gov. Scott Walker is tip-toeing through a political mine field as he floats the idea of changing the health insurance program for state employees.

State workers now select from several insurance options, many of them connected with regional Health Maintenance Organization (HMOs) that include hospitals and groups of physicians.

State workers and their family members, some 250,000 persons, obtain health care through the program. They are among the 1.5 million Wisconsin residents covered by the 18 regional plans.

That approach has been used for three decades in Wisconsin. It was started with the hope that price competition would curb medical costs while providing more preventive care for workers and their families.

Walker now suggests the state consider moving to the HMO regional system to one in which the state assumes the financial risks or benefits by providing and managing the insurance itself.

Consultants have provided different views on the fiscal impact of such a change. Walker notes that one consultant suggests the state might save $40 million. On the other hand, consultants warn that it could increase costs by $100 million.

Walker already is promising that any savings would be redirected to “public education.”

The Wisconsin Association of Health Plans suggests the governor should slow down. Phil Dougherty, senior executive officer, sent that warning shortly after Walker’s State of the State speech which included the idea.

“We are concerned the governor is getting ahead of himself by banking on ‘savings’ from self-funding the State Group Health Program,” said Dougherty.

“It’s premature to start spending savings from self-funding when the state’s request for bids is not even in draft form,” he continued.

He hints that some of the current plans would be squeezed by the impact of self-insurance and that would not be in the best interest of the state.

“Taking some of the best players off the field will increase the state’s costs, lower quality health care and have consequences for Wisconsin’s private insurance market and taxpayers,” Dougherty said.

Obviously the impact goes far beyond just state workers and their families. It could impact medical providers, HMOs, and the insurance industry.

Republican legislative leaders have adopted a cautious approach to the governor’s health insurance suggestion. The governor isn’t on this year’s ballot, but most of the legislators will be seeking additional terms in the November voting.

Republicans usually favor economic competition, such as the HMOs provide, rather than bigger roles for government itself.

Veteran politicians are reluctant to have potentially controversial ideas bounce to the front in an election year. It’s unlikely the issue will be resolved before 2017.

The loudest voices in dealing with this issue wouldn’t be the state workers. That role may be reserved for those employed in the insurance industry or physicians and hospital administrators.

Dealing with health insurance issues might be good training for state elected officials because of what could happen at the federal level.

Republicans have vowed to repeal the Affordable Health Care Act (Obamacare) as soon as they win the White House and keep control of the Congress. But what would replace it?

In the past House Speaker Paul Ryan, R-Janesville, has championed the concept of providing block grants to each of the 50 states and allowing the governors and legislatures to decide how to provide care for the poor.

The answer to the state employee issue may provide a hint of the future.


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