We’re a fan of a competitive marketplace. In most every case, competition is good for consumers. It’s good for access. It’s good for the successful providers that can successfully compete.
That’s why we’re pleased that the Legislature’s Joint Finance Committee wants to keep an eye on any changes planned for insuring state employees and their families.
And we’re worried about the interest of Gov. Scott Walker’s administration in changing a competitive model driven by private enterprise and turning it into a self-insured model where the state bears the financial risk.
A showdown looms this week in Madison.
Here’s a critical aspect of why we think this is an important topic: This doesn’t just affect 250,000 state workers and their families. It could affect the competitive landscape of the insurance marketplace for everyone in the state. And it could affect two local insurance plans in western Wisconsin.
Officials of the Wisconsin Association of Health Plans argue that the current system — which uses 18 health plans throughout the state, including the Gundersen Health Plan and Mayo’s Health Tradition Health Plan — has provided more access and more competitive pricing than a single-provider model.
The current model saved the state $1.15 billion from 2008 to 2013, based on Deloitte’s finding that state group health plan costs were 4.1 percent lower than the national average. The study was commissioned by the state and conducted by Deloitte, the state’s actuary.
Yes, the state could self-fund its insurance and save $20 million on fees for the Affordable Care Act.
What’s the risk? At least one study says there’s plenty of risk: Saving $20 million sounds great, but the switch could end up costing $100 million or more due to the higher cost and risk of the state getting into the insurance business. It’s a higher cost impact because the state could not obtain the same level of health-care cost discounts given to community-based health plans by their sponsoring providers.
Besides, why would the state want to take over a private enterprise that’s working well — especially when it could have an expensive impact on the rest of us?
Self-insurance “would eliminate health plan choices, disrupt doctor-patient relationships and destabilize the health insurance market,” Nancy Wenzel, CEO of the Wisconsin Association of Health Plans, wrote in her legislative testimony.
That last caution is the one all of us should pay attention to — and it’s clearly shared by the Republicans who lead the Legislature’s Joint Finance Committee, which has voted unanimously to ensure oversight of any changes in the plan.
“My concern (is) the potential disruption to the private market, not just the state employee plan,” said Rep. John Nygren, R-Marinette, co-chair of the Joint Finance Committee.
Sen. Alberta Darling, R-River Hills, the other co-chair, said: “The idea of how this pool of employees, of 200,000-plus, can affect the whole marketplace statewide is significant. That’s why we feel we have to have an oversight role.”
We always worry when government wants to enter a private enterprise. We’re especially worried when that enterprise is a competitive one that seems to benefit not only those insured, but the rest of the insurance consumers in Wisconsin.
These days, there aren’t many issues on which a legislative committee in Madison is unanimous in challenging the Walker administration.
In this case — in spite of the governor’s veto threat — we’re really pleased they’re focusing on oversight for the good of all consumers in our state.