Here & Now

WI Department Of Employee Trust Funds Responds To New Model

FREDERICA FREYBERG:

THE STATE OF WISCONSIN COULD SAVE MORE THAN $40 MILLION DOLLARS A YEAR BY SWITCHING TO A SELF-INSURANCE MODEL FOR PUBLIC EMPLOYEE HEALTH PLANS. THAT’S ACCORDING TO A CONSULTANT HIRED TO LOOK AT SUCH A CHANGE. SEGAL CONSULTING HAS ALSO RECOMMENDED OTHER COST SAVING MEASURES IN THE PLANS THAT COVER 250,000 PUBLIC WORKERS ACROSS THE STATE. AS PUBLIC EMPLOYEES WE ARE COVERED UNDER STATE HEALTH PLANS HERE AT WPT. WE HAVE TWO INTERVIEWS ON THIS TOPIC TONIGHT. IN A MOMENT WE HEAR FROM THE ASSOCIATION REPRESENTING HEALTH PLANS INVOLVED. BUT FIRST WE SAT DOWN WITH LISA ELLINGER FROM THE WISCONSIN DEPARTMENT OF EMPLOYEE TRUST FUNDS AND STARTED BY ASKING HOW MUCH MONEY ETF HOPES TO SAVE BY IMPLEMENTING THE CONSULTANT’S RECOMMENDATIONS.

LISA ELLINGER:

I THINK IT’S IMPORTANT TO RECOGNIZE THAT WE DIDN’T GO INTO THIS WITH A TARGET IN MIND. AND THAT THERE IS ACTUALLY A MUCH BROADER MOTIVATION FOR THIS REPORT AND THE RECOMMENDATIONS. ETF WAS MOTIVATED BY OUR INTEREST IN CONTINUING TO PROVIDE QUALITY, AFFORDABLE BENEFITS TO OUR MEMBERS. AND ALSO MAKING SURE THAT WE ARE MAXIMIZING OUR LEVERAGE AS A MAJOR PURCHASER IN THE MARKET TO THE BEST OF OUR ABILITY. AND SO WE DON’T HAVE A SPECIFIC TARGET IN MIND. WE OBVIOUSLY HAVE TO HAVE A FOCUS ON COST CONTAINMENT MOVING FORWARD BUT THERE IS A BROADER CONTEXT FOR THIS REPORT.

FREDERICA FREYBERG:

THE REPORT TALKS ABOUT THEIR $267 MILLION IN AVOIDABLE MEDICAL SERVICES. HOW DO YOU GET AT THAT?

LISA ELLINGER:

AND I ACTUALLY THINK THIS IS THE MOST EXCITING PART OF THE REPORT. IT’S REFERRED TO AS TOTAL HEALTH MANAGEMENT THROUGHOUT THE REPORT. AND WHAT THIS GETS AT IS TRYING TO MAKE SURE THAT OUR MEMBERS ARE AS HEALTHY AS POSSIBLE AND REALLY FOCUSING ON WELLNESS AND DISEASE MANAGEMENT. SO TO GET TO YOUR QUESTION HOW TO GET AT IT, IT IS BY MAKING SURE THAT WE HAVE INCENTIVES AND PROGRAMS IN PLACE TO MAKE SURE THAT OUR MEMBERS ARE IN THE BEST POSITION TO MAINTAIN AND IMPROVE THEIR HEALTH. IN ADDITION TO THAT, ALSO MAKE SURE WE ARE HOLDING OUR HEALTH PLANS ACCOUNTABLE FOR THEIR ROLE IN MAINTAINING AND IMPROVING OUR MEMBER HEALTH. AS THE SEGAL REPORT INDICATES, 65% OF OUR MEMBERS ARE DEALING WITH A CHRONIC CONDITION. AND THAT’S TRANSLATING TO 90% OF OUR CLAIMS COSTS. SO THIS IS OBVIOUSLY AN AREA WE NEED TO TARGET.

FREDERICA FREYBERG:

I KNOW THE STATE IS TRYING TO AVOID THE SO-CALLED 40% CADILLAC TAX IMPOSED BY THE AFFORDABLE CARE ACT. AND THAT WOULD AMOUNT TO BETWEEN 3 AND 5 MILLION THE FIRST YEAR OF THAT TAX BUT GOING FORWARD IT WOULD GO SUBSTANTIALLY HIGHER THAN THAT. TO ELIMINATE THIS TAX, RECOMMENDATIONS INCLUDE REDUCING THE VALUE OF THE HEALTH PLANS. WHAT DOES A REDUCED VALUE PLAN LOOK LIKE?

LISA ELLINGER:

A REDUCED VALUE PLAN COULD BE SOMETHING AS SIMPLE AS INCREASED DEDUCTIBLES AND CO-PAYS. BUT I HAVE TO SAY MY REACTION TO THE COMMENTS ON THE ACA IS THAT THIS IS NOT NEWS TO US AT ETF OR TO THE GROUP INSURANCE BOARD. WE’VE BEEN TRACKING THIS SINCE THE LAW WENT ON THE BOOKS SEVERAL YEARS AGO. AND WE HAVE DONE A LOT OF WORK OVER THE PAST SEVERAL YEARS TO MAKE SURE THAT WE HAVE AN EYE TOWARD THE IMPLEMENTATION OF THAT TAX. AND WE’RE STAYING BELOW THE PREMIUM THRESHOLDS THAT ARE PART OF THAT TAX. AND WHAT WE’VE DONE BEHIND THE SCENES WITH OUR HEALTH PLANS IS MADE IT VERY CLEAR THAT THE STATE IS NOT ABLE TO ABSORB A 40% TAX ON TOP OF OUR HEALTHCARE COSTS AND WE’VE USED THAT POINT TO LEVERAGE EXCELLENT PREMIUM INCREASES OVER THE PAST SEVERAL YEARS. IN FACT, OUR AVERAGE PREMIUM INCREASE SINCE THE ACA WENT INTO EFFECT IS 2.5% INCREASE, WHICH IS EXCELLENT YCOMPARED TO SOME OF OUR PEERS. AND STATE EMPLOYEE COSTS ARE ACTUALLY GOING DOWN 2.5% FOR 2016. SO THAT’S A LONG WAY OF SAYING WE’VE DONE A LOT OF WORK OVER THE PAST SEVERAL YEARS TO MAKE SURE WE STAY UNDER THOSE THRESHOLDS.

FREDERICA FREYBERG:

IN OTHER WORDS, WE WOULDN’T BE IN A POSITION, THE STATE OF WISCONSIN WOULDN’T BE, TO TAKE THAT TAX AT THIS POINT.

LISA ELLINGER:

WE’RE ARE TRYING TO POSITION OURSELVES SO IT WOULD NOT IMPACT US IN 2018.

FREDERICA FREYBERG:

THERE IS ANOTHER RECOMMENDATION IN THIS REPORT THAT WOULD MAKE IT SO THE TAX WOULDN’T BE IMPOSED AND THAT WOULD BE GOING TO A SELF-INSURED MODEL. AND WHAT WOULD THAT LOOK LIKE FOR THE MEMBERS, THE PEOPLE IN THE HEALTH PLANS, AS WELL AS THE HEALTH PLANS THEMSELVES?

LISA ELLINGER:

I WOULD LIKE TO TAKE THIS OPPORTUNITY TO EXPLAIN EXACTLY WHAT SELF-INSURING IS BECAUSE WHAT I FOUND — I KNOW YOUR VIEWERS ARE PUBLIC TELEVISION WATCHERS SO THEY’RE VERY SMART, SO MAYBE THEY ALREADY UNDERSTAND THIS CONCEPT. BUT SELF-INSURING IS SIMPLY ABOUT THE FINANCIAL ARRANGEMENT BETWEEN THE PURCHASER OR THE EMPLOYER AND THE INSURER. SO WHERE WE OPERATE TODAY, IN A FULLY INSURED ENVIRONMENT, WE’RE PAYING THE INSURERS A PREMIUM AND OVER THE COURSE OF THE YEAR THEY ARE PAYING ALL THE CLAIMS COSTS. SO IN A YEAR WHERE OUR MEMBERS ARE SICKER AND CLAIMS COSTS ARE HIGHER, THE HEALTH PLAN IS ABSORBING THAT. IN A YEAR WHERE OUR MEMBERS ARE NOT AS SICK AND CLAIMS COSTS ARE LOWER, THE HEALTH PLAN MAY PROFIT OFF OF THAT. IN A SITUATION WHERE WE WERE TO SELF-INSURE, WE THE STATE WOULD BE TAKING ON THAT RISK. SO IN A YEAR WHERE OUR MEMBERS WERE SICKER, WE WOULD HAVE HIGHER COSTS. AND IN A YEAR WHERE OUR MEMBERS WERE DOING BETTER, WE WOULD HAVE LOWER COSTS. AND SO IT’S OVER SIMPLIFYING BUT IN ITS PUREST FORM SELF-INSURING IS SIMPLY ABOUT THAT ARRANGEMENT. AND I THINK A LOT OF TIMES WHEN PEOPLE HEAR THE PHRASE SELF-INSURING THEY THINK IT’S ABOUT WHICH HEALTH PLANS ARE PARTICIPATING IN OUR SYSTEM, WHICH DOCTORS ARE PARTICIPATING IN OUR SYSTEM AND THOSE ARE SEPARATE AND DISTINCT CONVERSATIONS.

FREDERICA FREYBERG:

SO IT DOESN’T HAVE ANYTHING TO DO WITH COMPETITIVENESS IN THE HEALTH PLAN MARKET ITSELF, BUT THERE ARE RECOMMENDATIONS IN THIS REPORT THAT TALK ABOUT KIND OF CONDENSING HEALTH PLANS AND REDUCING THEIR NUMBERS.

LISA ELLINGER:

THERE ARE. IT TALKS ABOUT GOING TO A REGIONAL STRUCTURE BUT I HAVE TO EMPHASIZE THE FACT THAT SEGAL DOES VALUE COMPETITION AND HAVING OPTIONS AVAILABLE TO OUR MEMBERS. SO IN THE REPORT EVEN THO THEY DO PROPOSE A REGIONAL STRUCTURE THERE ARE STILL MULTIPLE HEALTH PLANS COMPETING. AND SEGAL DOES ALSO HIGHLIGHT THE IMPORTANCE OF OUR MEMBERS HAVING ACCESS TO PREFERRED PROVIDERS.

FREDERICA FREYBERG:

THE STATE GROUP INSURANCE BOARD COULD TAKE ACTION ON SOME OF THE CONSULTANT’S RECOMMENDATIONS AT ITS FEBRUARY MEETING.