State Insurance Board Needs More Time to Decide on Self-Funded Insurance Switch

MacIver News Service | December 13, 2016

[Madison, Wis…] Wisconsin’s Group Insurance Board decided to put off a decision about switching state employees to a self-funded health insurance system at a Tuesday meeting, citing the need to gather more information before making a final decision.

“We have not taken any action at all today,” said GIB chairman Mike Farrell after the board met in closed session for four hours on Tuesday to discuss the decision.

“As you know there is much complexity and volumes of information that relate to our consideration, and of course we are not taking these decisions lightly,” Farrell said.

The board will re-convene some time in January.

The decision to delay came a day after the co-chairs of the state’s Joint Committee on Finance sent a letter to Farrell and the GIB expressing their concerns over changing the state to a self-insurance model. “As we move into the 2017-19 state budget, we would appreciate continued dialogue. It is for this reason that we hope the GIB will take a deliberate approach, including more time if necessary,” wrote Sen. Alberta Darling and Rep. John Nygren in the letter.

At Tuesday’s meeting, GIB members reviewed several options for what form a self-insured system would take, some of which split the state into administrative regions where health insurers would compete. Under the self-funded model, the state would hire an administrator to run the program but would collect premiums and pay for claims directly. Currently, the state works with a network of 17 private health insurance plans throughout the state.

Darling and Nygren’s letter expressed concerns that a self-funded system would regionalize the state’s health insurance market and “would create artificial government boundaries,” disrupting the existing marketplace.

The Joint Committee on Finance has the final say in whether the state would switch to a self-funded system.

The state has been exploring the self-insurance idea for several years. A 2015 report by Segal Consulting showed Wisconsin could save $42 million a year under a self-funded model.

The GIB went further earlier this year, issuing a series of requests for proposals from potential administrators of a self-funded system, which they received and reviewed over the course of the summer and fall.

Read more about the decision at the Department of Employee Trust Funds website here.