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Self-insurance

A proposal that could shake up Wisconsin’s health care market is up for a vote in the Assembly Tuesday less than two weeks after being introduced.

The bill would allow businesses in the same chamber of commerce or industry association to join together and pay directly for their employee health care costs, similar to how many large employers self-insure as a way to manage costs.

Currently, businesses can band together to buy health insurance, but bill author Rep. Shannon Zimmerman, R-River Falls, said skyrocketing health care costs for families and businesses necessitates a new way for employers to find cost savings through what are known as association health plans.

Small businesses pay 8 percent to 18 percent more than large companies for the same coverage, Zimmerman said, citing a report from the National Conference of State Legislatures.

“Health care is one of the most important issues facing Americans today,” Zimmerman said in testimony before the Assembly Committee on Health last week. “If the law is working for big businesses and their employees, then I believe the same advantage should be given to smaller businesses.”

Rep. Deb Kolste, D-Janesville, said under the bill the associations aren’t regulated the same way insurance companies are, so allowing them to self-insure, rather than purchase group health insurance, could destabilize the health care marketplace under the Affordable Care Act. Specifically, she is concerned they would offer health care plans with fewer benefits, drawing younger, healthier people away from the ACA health care exchange.

Kolste also objected to the bill coming up for a vote before the U.S. Department of Labor finalizes new rules for how such health associations can operate. The draft rules would allow business associations to offer health plans that don’t include the 10 essential health benefits required under the Affordable Care Act, operate across state lines, and to offer stand-alone health plans. The comment period on the rules ends March 6.

As originally written, the Wisconsin bill wouldn’t have required associations to provide any of the health care coverage mandated under state law, though the associations would still be regulated by federal law. After the Wisconsin Chiropractic Association objected to the bill at a public hearing last week, the bill was amended to require certain chiropractic services that state law, but not the federal government, requires health insurance plans to include.

Robert Kraig, executive director of the liberal advocacy group Citizen Action of Wisconsin, said the bill puts forward a solution that other states tried, without success, before the ACA was passed to control costs. He said the more successful it is in pulling people away from the ACA marketplace, the more destabilizing it would be.

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“This is just another one of those sleights of hands that, at best, will make things worse,” Kraig said.

Dr. Bud Chumbley, CEO of the Wisconsin Medical Society, said the bill would allow Wisconsin to compete with other states that allow association health plans.

He noted states such as Texas are able to attract more doctors because association health plans allow smaller practices to thrive. Wisconsin has more large health care systems and not all doctors like to practice in such systems, he said.

“This is all about economic growth and attracting businesses and attracting growth,” Chumbley said.

Chumbley also disputed the concern that associations would drop coverage to cut costs. He said there are other overhead costs that businesses banding together could reduce by bidding out different services. He said he wouldn’t object to the bill requiring association health plans to follow all state insurance regulations.

Gov. Scott Walker, who has been promoting a package of bills to stabilize the state’s health insurance market, is supportive of the concept in the proposed bill, spokeswoman Amy Hasenberg said.

“We appreciate small businesses who are providing coverage to their employees and we are open to working with these ideas,” she said.

Last year Walker proposed allowing the state to self-insure as a way to reduce overhead costs from contracting with 17 different HMOs for state employees. Legislators rejected the plan as potentially too risky, with consultants estimating paying directly for health care could save the state $40 million or cost up to $100 million a year.

Due to the bill’s very recent introduction, Senate Republicans haven’t discussed it in caucus yet, so its support is unclear, said Dan Romportl, spokesman for Senate Majority Leader Scott Fitzgerald, R-Juneau. He said it could come up when the Senate convenes in March.

Capital W: Plug in to Wisconsin politics

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