March 25

Report Ignores Financial Risk to the State

(Madison) - We are stunned the report includes a savings number that has not been thoroughly analyzed, and fails to detail downside or risk. Two previous state-funded reports by Deloitte in 2012 and 2013 found that any potential savings could be more than offset by the cost of self-funding.

According to Deloitte, moving the State Employee Health Plan to self-funding could cost as much as $100 million or more. Even the Segal report said: "We are not convinced that the overall levels of discounts would remain the same where the health plan is not taking the risk for the plan."

We take issue with the suggestion that self-funding could be a viable option in 2017. We believe such a significant policy change would put the State of Wisconsin at great financial risk.

The current approach is one of the most effective models in the country in controlling health care costs and providing financial stability and predictability in state budgeting. Self-funding will put state government directly in the health insurance business and actually place the state at greater risk by turning fixed costs into variable and unpredictable costs.

The current model gives employees a choice between multiple private health plans aligned with local providers, with no new risk to Wisconsin. Self-funding would eliminate that choice. It will likely eliminate the choice of community-based health plans and their doctors and seriously disrupt patient-provider relationships that will not be replicated in a single-payer arrangement.

This debate is just beginning, and Wisconsin's community-based health plans look forward to working with Wisconsin policymakers to find efficiencies and new ways to save money in employee benefits. There are a number of cost-saving recommendations for 2016 that deserve serious consideration.

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