A bill that passed through the state Senate unanimously Friday could signal Wisconsin’s switch to a self-insurance plan.
The Senate amended the bill to avoid a veto from Gov. Scott Walker. Prior to the amendment, it would give the state’s Joint Finance Committee oversight of a program that insures thousands of state employees, annuitants, continuants and graduate assistants. With the amendment, the bill gives the Joint Finance Committee oversight of a self-insurance contract.
Justin Sydnor, University of Wisconsin actuarial science associate professor, said the bill would not have an immediate effect on anyone in the short run. Instead, it coincides with a larger debate over who should oversee a potential move towards a self-insurance model.
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Currently, insurance companies serve as an intermediary between state workers and the health care system, Sydnor said. The state then purchases the services provided by health insurance companies and the insurance itself.
Under a self-insurance model, the state would face greater financial risk, but potentially save money overall, Sydnor said.
“What would change in this system is that the state would stop buying insurance, so the state would keep the financial risk,” Sydnor said. “Now that might save the state some money because the insurance companies charge some money to take on that financial risk.”
Sydnor said self-insurance occurs when large organizations take on potential risk themselves instead of buying insurance from an outside insurance company to finance health care for their employees. This could lead to the state contracting with only a few insurance companies, he said.
At this point, Sydnor said the way a self-insurance model would affect Wisconsin is entirely speculation.
“No one quite knows how it will play out,” Sydnor said. “There are some insurers who are nervous of that uncertainty.”
According to a 2015 Segal Consulting actuarial science study, Wisconsin could save between $50 million to $70 million if the state switched to a self-insurance plan.
Indiana and Minnesota had the highest percentage of self-insured employees in the country, according to a 2012 report from the Employee Benefit Research Institute. More than 70 percent of employees in both state were self-insured at the time.
This is the second version of the bill to pass through the state Senate. Walker vetoed a previous version of the bill claiming the Legislature’s employment committee already oversees the program.
The bill will now go to the Assembly for a vote.