Gov. Scott Walker’s plan to self-insure state workers came under attack Tuesday from the Legislature’s budget committee, which questioned $60 million in purported savings, whether local governments could still participate and if medical benefits might change.
The Joint Finance Committee also heard that the state Department of Employee Trust Funds plans to reduce the number of health insurance companies covering workers from 18 to six, whether or not the budget panel approves self-insurance.
“What you basically just told everybody up here is it doesn’t matter what we say, and that’s the last thing we want to hear,” Rep. John Nygren, R-Marinette, committee co-chairman, told ETF administrator Lisa Ellinger, who said the reduction in insurers is nearly certain.
Rejecting self-insurance, in which the state would take on the risk for medical claims instead of paying premiums to HMOs, would prevent only about $24 million of the expected $60 million in savings over two years, the committee learned. Roughly $36 million would come from using fewer health plans, even without self-insurance, a state consultant said.
“We have to decide, is the savings that you get from that enough for us, with no risk, or do we say we want all the savings and we’ve got the appetite for the risk?” said Sen. Luther Olsen, R-Ripon.
The Wisconsin Association of Health Plans opposes both steps, saying they would disrupt the state’s competitive health care market.
Many committee members were skeptical of the $60 million in savings, which Walker said would be used for education. Some wondered why the state doesn’t take other steps to reduce health care costs. “Why self-funding?” asked Rep. Mary Felzkowski, R-Irma. “There’s a lot of savings to be had in benefit redesign.”
Under self-insurance, “we’re going to have to take the risk and dive into our reserves,” said Sen. Alberta Darling, R-River Hills, committee co-chairwoman.
Local government workers and dependents, including about 7,000 city of Madison employees and family members, make up about 39,000 of the 250,000 people in the state worker program.
A Wisconsin Legislative Council memo released Friday — prepared for Sen. Jon Erpenbach, D-Middleton, a committee member — said a state attorney general opinion in 1987 determined that the state constitution prohibits the state from setting up a self-insurance pool for local public workers. Losing the 39,000 people would change the self-insurance plan considerably, Nygren said. But Ellinger said ETF’s lawyer believes local government participants could be self-insured. If necessary, however, those members could remain insured through HMOs, she said.
The legislative council memo said the state would have to continue covering many mandated benefits under self-insurance, as ETF has said. The benefits involve domestic abuse, emergency conditions, chemotherapy, cancer clinical trials, mammograms, breast reconstruction, mental disorders, drug abuse, HIV, lead poisoning, jaw disorders, surgical dental care, autism spectrum, immunizations, hearing aids, colorectal cancer screening and contraceptives. But other mandates — such as home care, nursing home care, newborn and maternity care, diabetes care and disability services — wouldn’t have to be covered under state law, the memo said.
However, those things are covered for state workers now. “There’s no plans to change that,” Ellinger said.
Sen. Leah Vukmir, R-Brookfield, said that under self-insurance, many state workers might have to change doctors. She cited a letter to Walker in January from Group Health Insurance of South Central Wisconsin. The letter says the change could “threaten access” to Group Health doctors.
Dr. Mark Huth, Group Health’s CEO, told the Wisconsin State Journal Tuesday that state workers could still see Group Health doctors. But the HMO wouldn’t be their insurer, which could disrupt their care, he said.