September 16

(Madison) - Wisconsin has a uniquely competitive health insurance market, and state policymakers should be vigilant to preserve it, according to national health care competition expert Barak Richman. Further, he said, other states should do what Wisconsin is doing in its health insurance market.

The Duke University professor and authority on health care markets and policy was in Madison September 16 to speak at the Wisconsin Association of Health Plans 2016 Annual Meeting Education Program.

"Wisconsin has uniquely competitive markets, and the rest of the country should be more like Wisconsin, rather than the other way around," said Richman. He cited research showing more competition lowers prices and increases quality in both health care and health insurance markets. He noted Wisconsin has the most competitive health insurance market in the country, based on the number of Wisconsin health insurers and their relatively low individual shares of the market.

"Wisconsin is doing something right," Richman said. Wisconsin's story of success in market competition is unappreciated, but it is a story that needs to be told. He also said Wisconsin needs to maintain its pro-competition policies to make sure the markets stay competitive.

"Competition in health care and health insurance doesn't happen on its own," Richman said. "And in spite of robust evidence that more competition reduces prices and increases quality, we're seeing less competition" in many places. State governments often struggle to adopt pro-competition public policy, according to Richman.

In Wisconsin, 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. Richman sees the proposal as a move away from what has made Wisconsin's health care and insurance markets effective and toward what other states have done.

"State employee health plans can be enormously powerful policy tools," Richman said. "Using state pension plans and health plans creatively can really have positive impacts for the larger market structure. Wisconsin should not be doing anything other states are doing; it should be the opposite," Richman said.

Panel of Wisconsin Experts Affirms
Wisconsin's Competitive Market, Questions Self-Funding Proposal

The Education Program included a panel discussion among Wisconsin experts on competition in health care and health insurance. While each speaker provided a slightly different perspective on the value of health insurance competition, all reached the same conclusion: Wisconsin's health insurance market is unique and effective.

Kevin O'Connor, Chair of the Antitrust and Trade Regulation Practice Group at Godfrey & Kahn and former Wisconsin Assistant Attorney General, said Wisconsin's competitive health insurance market was developed over time through enforcement of antitrust laws, smart health care purchasing decisions by the state and avoidance of anti-competition regulations. He said self-funding the State Group Health Program could undermine many of Wisconsin's historical pro-competition policies and their positive results.

"Self-funding could unravel the link between the risk-bearing function (of health plans) and providing care," O'Connor said. "It will make Wisconsin's health plans less integrated and more like fee-for-service entities."

Justin Sydnor, Professor of Risk Management and Insurance at the University of Wisconsin, said research is broadly supportive of Wisconsin's health insurance landscape. And he said the proposed change to self-funding the State Group Health Program is unlikely to occur without breaking down the structure of Wisconsin's health insurance market.

Providing the perspective of health insurers and purchasers in Wisconsin's health insurance market, broker and consultant Gerald Frye of The Benefit Services Group said Wisconsin's current health insurance structure is delivering a high level of value and state budget stability.

"The main reasons states and employers go to self-funding don't apply to the state of Wisconsin," Frye said. For example, he said, the State Group Health Program cannot avoid state mandated benefits and the state already has uniform benefits. He also said Wisconsin insurers have low administrative costs and profit margins.

The Association is the voice of 13 community-based health plans that provide health insurance coverage in every county of the state to individuals, groups and government programs. More information on the Wisconsin Association of Health Plans is available at wihealthplans.org.

Barak Richman is a professor of law and business administration at the Duke University Law School and Fuqua School of Business where he teaches contracts, antitrust, and health law. Richman is an expert on health care markets and is regularly quoted in publications such as the Wall Street Journal, Politico, and Modern Healthcare.

Kevin O'Connor has more than 35 years of experience in antitrust, trade regulation, and consumer litigation and counseling. Kevin also served as the Assistant Attorney General in charge of antitrust and enforcement and head of the Office of Consumer Protection and Antitrust at the Wisconsin Department of Justice.

Justin Sydnor is the Leslie P. Schultz Professor in Risk Management and Insurance and an associate professor in the Department of Risk and Insurance at the Wisconsin School of Business. His research interests are in psychology and economics, applied microeconomics, (behavioral) industrial organization, insurance markets, and risk and decision making.

Jerry Frye is the President and owner of The Benefit Services Group, a health care benefits consulting agency, and BSG Analytics, a health care data analytics firm. BSG Analytics is a data warehouse and business intelligence firm that uses data from employers, payers and health systems to offer insights to clients on the market and various state policy issues.

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