Joint Finance Rejects Governor Walker's Self Insurance Plan For State Employees

Jun 15, 2017

State lawmakers on the budget writing committee Thursday rejected Gov. Walker’s proposed switch to a self-insurance model for state employees. Instead, the panel came up with other ways to save money. One of those methods likely would lead to an increase in health care premiums for state workers.

Under so-called self-insurance plans, state workers and their families buy insurance coverage from the state, rather than purchasing it through private HMOs. Gov. Walker lobbied heavily for the approach, citing 46 states that have adopted the model. He highlighted the item in his budget address in February.

“Moving the state to a self-insured plan, we believe, will save Wisconsin taxpayers at least $60 million during this budget cycle. As promised, we put that money entirely into public education. Part of it will go to K-12 public schools and part of it will go to the UW System,” Walker says.

Lawmakers on both sides of the aisle gave the governor’s proposal a lukewarm reception. Some Democratic critics warned that if the state switched to a self-insurance model, customers would have fewer health care choices, and would lose out on the cost savings that competition generates. In Thursday’s Joint Finance meeting, Rep. Gordon Hintz blasted Walker's plan.

“I’m happy to see the Finance committee flatly reject what I think was a risky scheme during a time of uncertainty in health care, especially with what’s happening at the federal level. This was a rejection of a push by the governor to try to free up money to pay for priorities that he doesn’t have the resources to invest in, because of past decisions made in the last few budgets,” Hintz says.

The panel unanimously rejected Walker’s plan, with the Republican leaders saying they had doubts about the projected savings the self-insurance model would generate. They added that thousands of Wisconsinites benefit from the "current, fully-funded competitive healthcare market," and said the committee's decision ensures the market's future.

Yet one of the governor's long-time allies, Sen. Alberta Darling, wouldn’t let the vote take place without defending him.

“I just want to clarify that the governor’s motive was not to pull one over on us or to give us an inferior product. I honestly believe he thought that it would help, have a quality health care system in Wisconsin and at a better cost and I just wanted to stand up and give that point of view because I know we started a discussion about self-insurance years ago,” Darling says.

The committee then adopted several provisions that would result in $64 million in money savings to match what Gov. Walker had promised the change to a self-insurance model would have offered. The measures include allowing the state to hike health insurance premiums up to ten percent.

Also on Thursday, the panel voted 12-4 to eliminate health care coverage for domestic partners of state and local government workers. The full legislature will have the final say on the budget items. Lawmakers typically try to wrap up by June 30, but it appears unlikely that will happen. Joint Finance still has to tackle K-12 funding and how to plug a $1 billion hole in the transportation budget.