State Releases Self-Insurance RFP

In July, the Wisconsin Department of Employee Trust Funds (ETF) released a request for proposal (RFP) for the administration of a self-insurance health plan for state employees. Responses to the RFP are due back by September 19. ETF recently extended the deadline by a week and a half. The Group Insurance Board (GIB), which sets policy for and oversees the group health plan for state employees and retirees, is scheduled to review the responses at their November meeting. According to ETF, the earliest the state would operate under the self-insurance model would be in 2018.

Although the RFP has been released, it is not clear what specific direction the state will take in regards to implementing the self-insurance model. ETF staff have indicated that the responses from the RFP will be evaluated to help inform the decision on if the state will self-insure, and if it will be on a statewide or regional basis. Under a self-insurance model, the state would assume the risk for claims and pay benefits. Currently, the state contracts with and pays a fixed monthly premium to 17 health insurers.

For several years, the state has been examining moving to a self-insurance model. Last year, ETF contracted with Segal Consulting to review the potential, if any, cost savings if the state made such a change. In their November 2015 report, Segal Consulting found there are financial reasons for the state to self-insure, potentially resulting in $40 million to $50 million in annual savings.

It is anticipated that GIB will make a decision by the end of the year on if the state will self-insure, and if so, also determine the structure and benefits. In addition to GIB’s approval, the Joint Committee on Finance (JFC) will have the opportunity to approve the contract.

At the end of the 2015-2016 legislative session, the governor signed 2015 Wisconsin Act 119, which requires GIB to notify JFC before the contract for self-insurance is executed. Act 119 also provides JFC the ability to schedule a meeting within 21 working days of GIB’s notification to vote on the approval of the contract. Under this circumstance, GIB cannot execute the contract without JFC’s approval.

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