State News

UW-Madison prepares for looming battle over self insurance

Image By: Katie Scheidt and Katie Scheidt

UW-Madison experts and policymakers gathered Tuesday to discuss what potential changes to the state’s insurance rules could mean for university faculty and staff.

Wisconsin is considering paying health benefits for state employees directly instead of buy through health maintenance organizations, a system known as self-insurance.

Gov. Scott Walker said he would consider pursuing the change in his State of the State address last month in order to use savings to beef up education funding instead.

“Tonight, I commit to investing every penny of savings to the general fund from [self-insurance] to support public education,” Walker said. “People tell me that they appreciate our efforts to get the state’s fiscal house in order and that now is the time to use savings to help our students prepare for the future.”

The change would not be without controversy, however. A report commissioned by the state Department of Employee Trust Funds in November said the state could save as much as $42 million by making the switch.

But a separate consultant says that moving to self-insurance could ultimately cost the state $100 million. Democratic lawmakers and labor leaders say the move is ill-conceived and is another way of targeting state employees.

Wisconsin’s Group Insurance Board has said it will accept bids this summer before deciding whether to make the switch to self-insurance in November.

In advance of the decision, the Public Representation Organization of the Faculty Senate hosted a forum Tuesday at the Wisconsin Institutes for Discovery to discuss what changes could entail for most of the 21,000 UW-Madison faculty and staff members who would be covered by the switch.

Lisa Ellinger, director of strategic health policy for ETF, acknowledged that there is significant uncertainty regarding the switch.

“It really is going to come down to the result of the evaluation,” Ellinger said. “What’s important … is the nature of the proposal. We’ve been talking about cost but [the board] will evaluate many factors.”

Ellinger did confirm that any savings would be passed on to retired state employees and those on Medicare, a concern many workers have expressed. She also noted that any changes would not happen until 2018 at the earliest.

Others, such as Mike Bare of the Community Advocates Public Policy Institute, are more apprehensive. Bare said there was “healthy skepticism” at whether the state could pay for an increase in claims.

“There could be a cost to taxpayers because of the risk assumed by [the state making benefit payments],” he said.

Ultimately the change could destabilize the existing health care market, UW-Madison School business professor Justin Sydnor said.

“There is a risk that a move like that could destabilize and change our provider network and our general health care system,” Sydnor said.

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