September 19

(Madison) - The Wisconsin Association of Health Plans is calling on state lawmakers to fully consider the risk and costs of self-funding the State Group Health Program. Today is the deadline for responses to the Department of Employee Trust Funds' (DETF) request for proposals (RFP) for administration of a self-funded State Group Health Program.

"Responses to an RFP will not show the full range of risks, costs and disruption that could result from self-funding the State Group Health Program," said Association Chief Executive Officer Nancy Wenzel. "Self-funding will interfere with established provider relationships, limit health plan choices and create budget instability for state and local governments, all real consequences the RFP responses won't show," Wenzel said.

The limitations of an RFP process were presented in a recent analysis by Gerald Frye of The Benefit Services Group. According to Frye, evaluating the full risk and cost of self-funding the State Group Health Program requires looking beyond the scope of the RFP process, including to the impact on Wisconsin's uniquely competitive health insurance market.

Wenzel said Wisconsin's state policymakers must be proactive about maintaining Wisconsin's uniquely competitive health insurance market, including preserving robust market competition in the State Group Health Program.

"The market competition model used in the State Group Health Program is a proven cost-containment strategy that saved the state hundreds of millions of dollars in recent years," Wenzel said. "Self-funding the State Group Health Program would increase the state's financial risk, and projected savings aren't likely to materialize," she said.

Barak Richman, a national authority on competition in health care and insurance markets, said in Madison September 16 that self-funding would be a move away from what has made Wisconsin's health care and insurance markets effective.

"Wisconsin has uniquely competitive markets, and the rest of the country should be more like Wisconsin, rather than the other way around," said Richman, who noted Wisconsin has the most competitive health insurance market in the country. Research shows more competition lowers prices and increases quality in both health care and health insurance markets.

Further, Richman said competitive markets don't happen by themselves. He said competition requires policymakers to support pro-competition policies and avoid anti-competition proposals.

Richman is a Duke University business and law school professor. He was the main speaker at the Wisconsin Association of Health Plans Annual Meeting Education Program, held in Madison.

The Group Insurance Board (GIB) is evaluating a recommendation from benefits consultant Segal to abandon its current competitive, fully insured model and self-fund the State Group Health Program. Over the past several years, the current market competition model has delivered cost control and financial savings for the state.

For the five-year period preceding 2016, DETF reported premium trend of 2.5 percent per year for the State Group Health Program. In 2016, DETF reported a reduction of 2.5 percent in premium. For 2017, the premium increase in the competitive model is 1.6 percent. The state's fully insured premium trend for the State Group Health Program has consistently been below state and national averages, including for self-funded plans.

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