Private Consultant Concludes State Could Save Up to $50 Million, Annually, if State Self-Insures

Monday, November 16, the Assembly concurred in legislation passed by the Senate to give the legislature more control and authority over state employee health insurance programs. Joint Committee on Finance Co-Chairpersons Representative John Nygren (R-Marinette) and Senator Alberta Darling (R-River Hills) introduced Senate Bill 312/Assembly Bill 394 which would have allowed the Joint Committee on Finance to review and approve any changes proposed by the Group Insurance Board to the health plan for state employees. Instead, the Senate narrowed the legislation such that committee approval is only required if the state moves the program to a self-insured model. Governor Walker is expected to sign the narrowed legislation into law.

In a directly-related matter, the state’s Group Insurance Board, which sets policy for and oversees the group health plan for state employees and retirees, has been considering whether Wisconsin should move to a self-insurance plan for its employees. The state contracted with Segal Consulting to review the potential, if any, for cost savings if the state made such a change. Segal Consulting concluded there are financial reasons for the state to self-insure, potentially resulting in $40 million to $50 million in annual savings. Specifically, Segal Consulting noted “[t]he vast majority of other states utilize self-insurance for their state employee health plans and, in our analysis, there does not appear to be a compelling reason for [the state] to remain fully insured over the long-term strategy.” In conclusion, Segal Consulting recommended a phased-in approach for the state to transition to self-insurance.