The Truth about Self-Insurance
Over the last six years, Governor Walker has made a name for himself on the national political stage with his blatant attacks on public employees. With grandiose promises of greater fiscal management and exaggerated rallying cries of unfair overcompensation and state employee fat cats, Walker and legislative Republicans have carefully crafted a message that doesn’t reform the State of Wisconsin, but rather destroys the working people of Wisconsin. While millions were plucked from families’ pocketbooks to “balance the budget,” Wisconsin’s last state budget spent $2 billion more than the last state budget and we are now facing a nearly $700 million budget shortfall going into the 2017-19 state budget.
Gov. Walker has launched his next area of attack against public employees – the Group Health Insurance Program (GHIP). Currently, the Program consists of 17 health plans and serves more than 250,000 state and local government employees, retirees, UW employees and their dependents. Approximately 100,000 of these residents live in Dane County alone. With one of the most competitive health insurance markets in the country, our premium increases have remained well below the national average and the current format of GHIP has kept costs down, saving the State $283 million over the last nine years despite efforts by legislative Republicans to shift more healthcare costs on employees.
So, why are Governor Walker and the Group Insurance Board (GIB) meddling with a system that is cost-effective and provides high quality care? The answer: A continuing vendetta against public employees and a misplaced ideological opposition to the Affordable Care Act (ACA).
For years, Governor Walker and the GIB, stacked with Walker political appointees, have attempted to make significant changes to GHIP. Under their scheme, Wisconsin would begin to self-insure the Group Health Insurance Program (GHIP), which means instead of funding our health insurance through premiums to an outside third party, the state assumes all financial obligations and legal liabilities. For example, if you are a state employee and have open heart surgery, the State of Wisconsin is on the hook for the costs for that surgery, no matter how high, rather than an insurance company to which the state pays a premium.
What does this mean for the taxpayers of Wisconsin? It is estimated that the state’s cash reserves are not even close to covering the potential risks of self-insurance and we would need to triple our cash reserves at a minimum, which given what we know about this Administration, will once again fall on to the back of working families. States like North Carolina have seen a $200+ million budget deficit due to an accumulation of unexpected claims when shifting to a self-insurance model. In a state like Wisconsin that naturally has higher health insurance costs, partially due to our chronic disease condition rates being significantly higher than the national average, a move to self-insurance could bankrupt our state and further siphon general purpose revenue from our public education and transportation systems that desperately need more public investments.
In addition to contemplating a move to self-insurance, GIB is also considering splitting up the state into four regions for delivery of the GHIP. Under the current model, insurers work with both local providers and the state to establish a service area that keeps costs down and ensures high quality care. Under the switch to regionalization, insurers would lose that flexibility and would be forced into a set region approved by the State. This would require insurers to establish new, perhaps costlier, agreements with providers for communities they currently do not serve while also requiring some providers to stop providing care to communities they currently do serve, disrupting patient/physician relationships. We already know that several health plans within the current program would not make the switch to regionalization and this only means fewer choices and lower quality health care for you and your family.
The majority of “cost savings” that could come from these proposals are largely generated by the State evading various ACA taxes and fees. Given the uncertain future of the ACA with the incoming Trump regime, now is not the time to roll the dice on Wisconsin’s healthcare system. Elections come and go, as well as the politicians that use their time in office to boost their resumes instead of serving the people they’re elected to represent, but the fact remains that these changes have real life and death consequences on real Wisconsinites lives.