On February 17, the state’s Group Insurance Board (GIB), which oversees the group health, life, income continuation, and other insurance programs offered to state employees, covered local employees, and retirees, voted to develop and issue a Request for Proposals (RFP) to evaluate the impact of self-insuring the group health insurance program.
The state’s group health insurance program provides health insurance to state employees and to local governments that choose to participate. Fifty-six cities, 108 villages and eight school districts currently participate in the GIB’s health insurance program for local governments.
Department of Employee Trust Funds (ETF) staff plans to distribute the RFP in July, with responses due by September. Then, staff will review the responses and present the results of the RFP in November.
If the GIB decides to self-insure the group health insurance program, the earliest this could occur would be in plan year 2018. (For more information, see the ETF staff memo to the GIB on this issue.)
During his appearance before the State Education Convention in January, Governor Scott Walker repeated his pledge, first announced during his State of the State address, to invest an unspecified amount of savings created by the proposed restructuring of state employee health care coverage into public education.
Currently, the state contracts with 17 health insurers and pays them a fixed monthly premium. The funds used to pay the premium are primarily a combination of employer and employee contributions. The insurers use the premium dollars from the state to pay employee medical claims.
Under a self-insured model, the employer (rather than an insurance company) assumes all risk and pays claims. The employer also contracts with a third-party administrator for managing provider networks, collecting premiums and processing claims. For participants, the self-insured plan typically offers the same benefits and levels of service as a fully-insured plan. Currently, the state self-insures its pharmacy and dental benefits.
If the state moves to a self-insured health plan model, the state will stop paying monthly premiums to health insurers and instead directly pay for employee medical claims. The source of the state dollars remains the same: a combination of employer and employee contributions.
Two actuarial firms recently retained by the GIB reached different conclusions about the financial impact of self-insuring, but both concluded that an RFP is the advisable next step to thoughtfully evaluate options for re-structuring the program.
The WASB will monitor this issue as it continues to develop and keep you informed as more information becomes available.