Here & Now

Dougherty On Changes In State's Employee Trust Fund

FREDERICA FREYBERG:

THE WISCONSIN ASSOCIATION OF HEALTH PLANS HAS MAJOR CONCERNS ABOUT WHAT SUCH CHANGES COULD MEAN. PHIL DOUGHERTY IS SENIOR EXECUTIVE OFFICER WITH THE ASSOCIATION. THANKS VERY MUCH FOR BEING HERE.

PHIL DOUGHERTY:

THANK YOU.

FREDERICA FREYBERG:

SO THE ASSOCIATION OF HEALTH PLANS BIG CONCERN IS BLOWING UP THE CURRENT ARRAY OF HEALTH PLANS TO GO TO THIS SELF-INSURED MODEL. DESCRIBE HOW THE SELF-INSURED MODEL WOULD CHANGE WISCONSIN’S HEALTH INSURANCE MARKET.

PHIL DOUGHERTY:

IT’S IMPORTANT TO UNDERSTAND WISCONSIN HAS THE MOST COMPETITIVE HEALTH INSURANCE MARKET IN THE COUNTRY. AND THAT MATTERS. COMPETITION AND CHOICE MATTER IN WISCONSIN. THEY HAVE PROVEN TO HELP KEEP COSTS DOWN, HELP PROMOTE ACCESS, HELP PROMOTE IMPROVEMENTS IN QUALITY. BY GOING TO SELF-FUNDING, IT WOULD BE ELIMINATING THOSE PLAYERS THAT ARE PARTICIPATING IN THE STATE GROUP HEALTH PLAN NOW AND THE STATE WOULD ACTUALLY BECOME — ENTER THE BUSINESS OF HEALTH INSURANCE. AND BY ELIMINATING THOSE PLAYERS — YOU ARE TALKING A LOT OF DISRUPTION FOR CONSUMERS. YOU ARE ELIMINATING SOME OF THE HIGHEST QUALITY, LOWEST COST HEALTH PLANS IN THE STATE. AND THAT WOULD INCREASE COSTS FOR THE CONSUMERS. INCREASE COSTS FOR THE STATE AND INCREASED RISK FOR THE STATE. WE DON’T THINK THAT’S A GOOD IDEA.

FREDERICA FREYBERG:

WELL, SO WHY DO YOU THINK THEY’RE LOOKING AT THIS SO HARD?

PHIL DOUGHERTY:

I THINK SELF-INSURANCE, SELF-FUNDING IS A SOLUTION FOR SOME EMPLOYERS. BUT WISCONSIN IS NOT LIKE OTHER EMPLOYERS. IT HAS A STATEWIDE POPULATION. 250,000 ENROLLEES ROUGHLY. AND — BUT THERE ARE OTHER IMPACTS THAT WOULD RESULT BY BRINGING — WHAT IT AMOUNTS TO, ABOUT 14% OF THE FULLY INSURED COMPETITIVE HEALTH INSURANCE MARKET, TAKING THAT OUT OF THE MARKET AND ESSENTIALLY MOVING IT INTO A SELF-FUNDED ARRANGEMENT.

FREDERICA FREYBERG:

I KNOW THE CONSULTANT SAYS MANY OTHER STATES HAVE THIS SELF-FUNDED SELF-INSURED MODEL. AND ASKS WHY NOT US?

PHIL DOUGHERTY:

WELL, IT’S A QUESTION THEY CAN ASK AND THEY CAN ANALYZE IT. WE DON’T HAVE ANY PROBLEM WITH HELPING THEM UNDERSTAND FRANKLY STARTING WITH WHAT WORKS. THE STATE GROUP HEALTH PLAN USING THE COMPETITION AND CHOICE MODEL HAS SAVED THE STATE A LOT OF MONEY, HAS PROMOTED STABILITY, HAS PROMOTED ACCESS AND HIGHER QUALITY CARE. IT’S ONE OF THE BETTER PROGRAMS IN THE COUNTRY. WHY DO WE WANT TO BLOW THAT UP, CREATE DISRUPTION, INCREASE COSTS AND RISKS FOR THE STATE?

FREDERICA FREYBERG:

I THINK YOU POINT OUT THAT THE PLAN THAT WE’RE CURRENTLY UNDER HAS SAVED MORE THAN A BILLION DOLLARS OVER FIVE YEARS. ETF POINTS OUT THAT REALLY GOING TO THIS SELF-INSURED MODEL IS JUST ABOUT THE STATE TAKING ON THE RISK AND THEY SAY THAT REALLY DOESN’T HAVE ANYTHING TO DO WITH WHICH DOCTORS, WHAT THEY CALL MEMBERS COULD AVAIL THEMSELVES OF OR HEALTH PLANS.

PHIL DOUGHERTY:

A COUPLE OF THINGS. WE DON’T THINK THAT IT SHOULD BE DISMISSED AS JUST THE STATE TAKING ON THE RISK. TAKING ON RISK, BECOMING AN INSURANCE COMPANY IS A SIGNIFICANT ISSUE. IT RESULTS — IT WOULD REQUIRE THAT THE STATE INCREASE ITS RESERVE SO THERE IS A FINANCIAL IMPACT THERE. GREATER FINANCIAL RISK, POTENTIAL BUDGET INSTABILITY.

WITH RESPECT TO THE PROVIDERS AND THE RELATIONSHIP THAT STATE EMPLOYEES HAVE DEVELOPED WITH HEALTH PLANS AND THEIR DOCTORS OUT THERE, THEY ARE UNDER CONTRACT WITH THE HEALTH PLANS. OUR MEMBERS ARE OUT IN MANY CASES THEY’RE INTEGRATED THE HEALTH PLANS AND THE PROVIDERS ARE INTEGRATED AND THEY ESTABLISH THESE RELATIONSHIPS AND THAT’S ALL FUNCTIONING IN PROMOTING ACCESS.

WHEN YOU ELIMINATE THAT HEALTH PLAN YOU ELIMINATE THAT CONTRACT. YOU ELIMINATE THOSE PROVIDERS. THE STATE WOULD HAVE TO GO BACK OUT AND CONTRACT WITH EACH OF THOSE PROVIDERS EVEN IF THEY WERE ABLE TO DO THAT, AND ACCOUNT FOR ALL THE PROVIDERS. IT WOULD CREATE TREMENDOUS DISRUPTION. AND CREATE DISRUPTION IN THE DOCTOR/PATIENT RELATIONSHIP, WHICH IS NOT A GOOD IDEA.

FREDERICA FREYBERG:

I KNOW ANOTHER RECOMMENDATION IN THE CONSULTANT’S REPORT WOULD CONSOLIDATE THESE HEALTH PLANS DOWN FROM 17 ACROSS THE STATE INTO KIND OF A REGIONAL STRUCTURE WHICH WOULD REDUCE THE NUMBER OF THOSE PLANS TO THREE.

SO I GUESS I KNOW WHAT YOUR RESPONSE TO THAT IS.

PHIL DOUGHERTY:

IT GOES BACK TO COMPETITION AND CHOICE. COMPETITION AND CHOICE MATTERS. IT HAS IMPROVED THE QUALITY OF HEALTHCARE IN WISCONSIN. ITS IMPROVED COST STRUCTURE TO THE EXTENT THAT HEALTHCARE COSTS ARE HELD LOWER THAN THEY OTHERWISE WOULD BE.

WHAT THEY’RE RECOMMENDING DOING IS DIVIDING THE STATE INTO THREE REGIONS AND SEVERELY LIMITING COMPETITION AND ELIMINATING CHOICE BY HAVING POTENTIALLY ONE HEALTH PLAN IN EACH REGION. WHY WOULD WE WANT TO DO THAT? AGAIN IT’S DISRUPTION, IT’S ELIMINATING SOME OF THE BETTER QUALITY, LOWER COST PLANS IN THE STATE. AND WE THINK THAT’S GOING TO CREATE INCREASED COST, NOT REDUCED COST.

FREDERICA FREYBERG:

PHIL DOUGHERTY, THANKS VERY MUCH.

PHIL DOUGHERTY:

YOU BET.