While the Group Insurance Board is working to create a self-insurance model for Wisconsin, some University of Wisconsin experts argue the model could destabilize the state’s health care system.
Justin Sydnor, UW actuarial science associate professor, said self-insurance’s impact on Wisconsin is unclear. According to a report from the Department of Employee Trust Funds, the self-insurance model would save the state approximately $42.1 million, but Sydnor said it could lead to some receiving benefits not right for them.
Sydnor said Wisconsin currently follows a competitive insurance model, in which the state purchases insurance from 17 health maintenance organizations. These organizations are insurance companies integrated with health care provider networks. When someone claims insurance, the state pays a premium to the health maintenance organization, then the organization works to provide the appropriate care, he said.
“There are some risks with the self-insurance model in that it could lead to more costs and people would have benefits that are not good for them,” Sydnor said.
The Group Insurance Board, which is responsible for making insurance-related decisions in Wisconsin, the Department of Employee Trust Funds and Segal Consulting are creating a potential self-insurance model for the state, Sydnor said.
Report says Wisconsin would save $42 million by switching insurance models
Mike Bare, research and program coordinator for Community Advocates Public Policy Institute in Milwaukee, said in a self-insurance model, the state would be responsible for a third party administrator such as a trust fund, which would manage the relationship between the provider and the patient similar to how health maintenance organizations do in the state’s current model. Self-insurance would make the state instead of the health maintenance organization pay for insurance claims in full, he said.
If a self-insurance model is implemented in Wisconsin, state employees would have limited options in terms of health care providers and insurance companies to choose from, Bare said. This limitation would also decrease competition among insurance providers in the state as some will not be able to continue operating in a self-insured model. He said this would be a “significant disruption” to the private health insurance market.
Currently, state pays 88 percent of the premium while the state employees pay 12 percent, Bare said. Shifting to the self-insurance model would most likely maintain this ratio.
Sydnor said shifting to a self-insurance model could benefit state employees. This is because the model depends on how many claims are made in a year. In a year with fewer claims, the state would have a surplus of funds, which it can redistribute to state employees or use to lower employee premiums. In this way, it would reduce total costs for health care for everyone.
“The way [the self-insurance model] could help state employees is the way it could help everyone in state,” Sydnor said.
Bare said while self-insurance would create surpluses, the money from these savings would compete with other state-funded sectors such as transportation, education and roads.
Bare said the board needs to consider other alternatives to the self-insurance model. Consultants created an alternative plan which would allow the state to buy insurance plans from the state’s healthcare marketplace and could save the state $240 million in 2015 and more over time, he added.
“[The Group Insurance Board] hasn’t asked questions which I think is disservice to employees,” Bare said.
Sydnor said the Group Insurance Board is in the process of developing requests for proposals related to implementing the self-insurance model in the state. The board will submit these proposals in summer 2017 and they will be analyzed by November 2017.
A previous version of this article incorrectly cited Group Insurance Board as Government Insurance Board. A correction has been made and The Badger Herald regrets this error.
