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Self-Insurance Savings Now Estimated at $103 Million

Comments | Posted in MacIver News Service | By MI President Brett Healy | Posted May 26, 2017 9:50 AM

Projected premium spike adds $21 million in costs if current system remains

MacIver News Service | May 26, 2017

By Chris Rochester

[Madison, Wis...] Projected savings from adopting a self-insurance model for state employees' health insurance have grown to $103 million over the next budget, officials announced at the Capitol on Friday.

The revised savings - $21 million more than previous estimates - are the result of a projected ten percent premium increase in the state's current health insurance plans in 2018. The state currently farms out insurance for its 250,000 employees and dependents to a network of private HMOs.

The $21 million is on top of $22 million in Obamacare market taxes that the state would be exempt from under a self-insurance system, and $60 million in savings the state's Group Insurance Board says the state would save by switching to the self-funded system. The total savings would now add up to $103 million with the expected premium increases next year.

Officials stressed that the $103 million in savings would only happen if Legislators approve a self-insurance switch in the state's 2017-19 budget. If the legislature opts to stick to the status quo, the money will have to come out of taxpayers' pockets instead.

"There is no reason the hard-working taxpayers of Wisconsin need to send their money to Washington for an Obamacare tax," Department of Administration Secretary Scott Neitzel said.

Neitzel, joined by Deputy Commissioner of Insurance J.P. Wieske and state Budget Director Waylon Hurlburt, also warned that trying to wring equivalent savings out of the current system could lead to a sharp increase in costs to employees.

With contracts with potential administrators of a self-insured system in hand, there's little doubt remaining about the taxpayer savings and types of plans if the switch is made. "We know what will get under self-insurance," Neitzel said, adding any other options being considered are speculative.