Just the Budget Update.JPG

      Understanding the Budget Process Week by Week

June 7, 2017

 Self-Insurance Update

 State Rep. Steve Doyle

State Capitol
PO Box 8952
Madison, WI 53708

(608) 237-9194
(888) 534-0094


Website Logo.JPG (1)Facebook Logo.JPG

Budget Chart - JFC Vote.jpg


You may have seen some news lately about the Governor’s plan to self-insure state employees. That proposal has faced strong criticism from the Republican members of the Joint Finance Committee who have gone on the record saying they will reject the plan.

But what is self-insurance?

6-5 Self Insurance.JPG

Under the Group Health Insurance Program, the employee’s and employer’s contribute to pay a premium to the insurance company. When you go to the doctor, the appointment is paid for with that premium. With a self-insurance model, the state would contract with insurers to fund medical bills and claims directly. The employee’s and employer’s contribution to the premium would go to the state Department of Employee Trust Funds (ETF). ETF would then pay for the health care services while still contracting with insurance companies to provide certain administrative services. Additionally, in the current program, the state pays fixed premiums to 18 HMOs statewide. Under self-insurance, the number of insurers would shrink to 6 and be divided into four regions across the state.

6-5 Group Insurance.JPG

So the big differences are how the insurance program is financed, where the premiums go, who is responsible for handling the claims, and what providers would be available to state workers.

Aside from changing the way healthcare works for 250,000 people, the Governor’s proposal calculates that the move will result in large savings for the state. His budget used those anticipated savings to fund many other programs, namely K-12 public education.

So if the JFC votes against self-insurance, where will the money come from for the schools? That is the $60 million or $47 million question – depending on who is doing the math.

In his budget proposal back in February, the Governor stated that moving to a self-insurance model would save the state $60 million over the biennium. But last week, the nonpartisan Legislative Fiscal Bureau (LFB) released their own independent analysis which projects the estimated savings from the switch to $47 million. The Republican leaders of the JFC are putting their faith in the LFB numbers.

The Governor is also claiming that if the JFC goes ahead and rejects his plan, the state will be left with a $103.4 million hole in the budget. That number comes from the $60 million in savings plus $22 million in ACA fees (they would not need to be paid under self-insurance) and $21.4 million in costs from anticipated premium increases.

Here’s another point of debate: “anticipated premium increases.” The Governor and his administration originally had budgeted for a 7% increase but now they are saying it will be closer to 10%. But the LFB says the average increase is 5.3% and doesn’t expect this year to be much different. They also estimates that the ACA fee savings is closer to $18 million.

6-5 Gov vs LFB.JPG

Another issue that is pitting the JFC co-chairs against the Governor is the reserves held by the Group Insurance Board (GIB), which administers the health insurance for state workers. Last year, the GIB’s reserves increased by $63 million, exceeding the maximum recommended level by $18 million. The Governor’s administration claims that the savings build up was in anticipation of the move to self-insurance – but the co-chairs are concerned that the GIB took that action even before the legislature considered the proposal in the first place.

So where does that leave us?

6-5 Self Insurance Questions.JPG

A bit confused if you ask me. The co-chairs believe they can find enough savings by tweaking the current insurance model – enough to still fund the increases to K-12 education. They are also calling for an audit on the GIB to find out more about their reserves and why those savings weren’t passed on to taxpayers. The JFC hasn’t yet set a date to vote on self-insurance either.

At the end of the day, we’ve got the leaders of two branches of government fundamentally divided on what to do. And with each passing day it looks like they are getting further and further away from a solution.

Recap of Wednesday, May 31st:

6-5 DNR, State Parks, Supreme Court.JPG

DNR Magazine

  • The JFC voted against the Governor’s recommendation of eliminating the DNR’s Wisconsin Natural Resources magazine.
  • Instead, they advanced a proposal to publish the magazine four times a year instead of the current six.
  • The communications director of the DNR was also designated to be the magazine’s editor.

State Park Fee Raises

  • The JFC voted to give the DNR the authority to raise the daily entrance fees at state parks and forests by $5 and nightly camping fees up by $10.
  • But the committee rejected the Governor’s plan to increase the annual pass by $10.

Roadkill Removal

  • Currently the DNR is required to create a grant program to remove deer killed by cars from Wisconsin roads.
  • The JFC eliminated the grant program and transferred the responsibility to pick up car-killed deer to the DOT.
  • The DOT would be required to contract with private companies or municipalities but would not receive any additional funding.

Supreme Court

  • The committee approved the Governor’s proposal to give Supreme Court justices and state judges a pay raise.
  • They rejected his plan to create a new formula for determining judicial pay in the future.

Parole Commission

  • The Governor’s budget called for the elimination of the Parole Commission
  • The JFC voted to keep the commission but cut the number of members in half.

The JFC will be meeting again this month but we do not yet know what they are going to be voting on. They seem to have saved all the controversial issues for last, banking on the hope that they would have the deals worked out. For now, we will have to wait and see.

Until next time,