As expected, on June 15, the Joint Finance Committee (JFC) unanimously rejected the governor’s self-insurance proposal. After rejecting the contracts, JFC co-chairs Rep. John Nygren (R-Marinette) and Sen. Alberta Darling (R-River Hills) put forth their own budget motion, which passed unanimously and still achieved the savings target ($63.9 million general purpose revenue (GPR)) over the next biennium.
The governor’s 2017-19 budget assumed the state would achieve $60 million in savings from the move to self-insurance ($20 million GPR in 2017-18 and $40 million GPR in 2018-19). Walker’s budget in turn invested the savings in K-12 education and used it to offset increased salary and fringe benefits of UW-System employees. The discrepancy between the $60 million and $63.9 million is due to a re-estimate of the governor’s original proposal by the Legislative Fiscal Bureau.
The JFC co-chairs’ motion passed unanimously. However, as minority JFC members took the bipartisan action as an opportunity to discredit the governor’s proposal, several Republican JFC members pushed back on their reasons for rejecting the proposal and acknowledged the benefits of self-insurance in the private sector.
To accomplish the same level of savings as the governor, the Nygren/Darling motion directs the Group Insurance Board (GIB) to achieve negotiated savings with insurers ($22.7 million GPR) and draw down reserves ($25.8 million GPR). The remainder of the savings ($15.4 million GPR) will be achieved through: increased health care tiers (moving from 3 to 5 tiers), more reserve drawdowns, and plan design changes that do not increase more than 10 percent to employee costs for Tier 1 plans. This could include changes to premiums, copays, deductibles, coinsurance or out-of-pocket maximums.
The co-chairs’ motion also included more legislative oversight of GIB and their reserve policy. It also provides legislative leadership with four appointments to GIB. JFC will have 21-day passive review on all changes GIB makes to the state employee health plan. Finally, as mentioned by the co-chairs before, the motion directs the Joint Legislative Audit Committee to request an audit of the state employee program, including GIB’s reserve policy.
With the budget in limbo, the timing of when JFC will finish their work and when the full legislature will vote on the budget is unknown. Once passed by the legislature, the governor can use his partial veto before signing the budget bill into law.
The question now becomes not if JFC will reject the governor’s self-insurance proposal, but rather how much of the legislature’s alternative proposal will the governor veto?