MADISON, Wis. (AP) - The Legislature’s budget committee’s leaders said Wednesday they’ll ask auditors to look into why the state’s health insurance programs reserves grew by $63 million last year.
The nonpartisan Legislative Fiscal Bureau released a memo Wednesday showing reserves grew from $81.5 million in 2015 to $144.4 million last year. The memo notes the state’s actuary recommended not spending the reserves in 2016 and 2017 to help cushion a move to self-insurance. Under that system the state covers its workers and their families directly rather than buy health insurance through HMOs. The state would assume the risk for medical claims that exceed premiums.
Gov. Scott Walker’s state budget calls for making the shift to self-insurance, saying the move could save $231.5 million over the next 18 months. Walker’s fellow Republicans say they won’t approve the move because they’re not convinced the savings will materialize and such a drastic change could cause upheaval in the state’s health insurance industry.
Joint Finance Committee co-chairs Rep. John Nygren and Sen. Alberta Darling told reporters that they’ll seek an audit looking into why the state’s insurance board went that route rather than using the money to defray costs and lower premiums.
Mark Lamkins, a spokesman for the Department of Employee Trust Funds, which oversees the insurance board, said the Group Insurance Board did not withdraw the reserves last year because it was able to negotiate low premium increases for 2017 and because of the “unique situation” that self-insurance was under consideration.
Walker’s administration issued a news release saying that reducing the reserves would result in only one-time savings and moving to self-insurance would result in ongoing savings.
The Fiscal Bureau’s memo also noted that a self-insurance shift may not save as much as Walker’s budget projects. The governor’s spending plan assumes a self-insurance move would save the state $82 million in tax dollars and Affordable Care Act fees over the next 18 months. A bureau re-estimate found that the move would save between $65.1 million and $82.2 million in tax revenue and fees.
Darling reiterated to reporters that the finance committee won’t approve a self-insurance model. Walker’s administration said in its release that self-insurance remains the best option for saving the most taxpayer dollars.
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