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Budget committee leaders: Panel will reject self-insurance

Wisconsin State Capitol (WLUK/Don Steffens)

MADISON (AP) -- The leaders of the Legislature's powerful budget committee said Tuesday the panel will reject Gov. Scott Walker's plan to move the state to a self-insurance model.

The governor has included provisions in the state budget that shift the state to self-insurance. Under such a plan, the state pays for health insurance for about 250,000 state workers and family members directly rather than purchasing insurance for them through 15 HMOs. The state would assume the risk for medical claims.

The state Group Insurance Board estimates the change could save the state about $60 million over the two-year budget. Walker has built that savings into additional funding for education. Walker's fellow Republicans have greeted the self-insurance proposal with skepticism, though. They're not convinced the savings Walker has promised will materialize. They've been signaling for weeks the change won't get through the Legislature.

Regardless, Walker's administration negotiated self-insurance contracts and submitted them to the Joint Finance Committee on Monday. Committee members have 21 days to object to the deals.

The panel's Republican co-chairs, Rep. John Nygren and Sen. Alberta Darling, told reporters on Tuesday that they anticipate an objection. Darling said she was objecting to the contracts right there on the spot.

She said a self-insurance model will lead to higher premiums, there's too much national uncertainty about the future of former President Barack Obama's health care reforms to make changes right now and moving thousands of state workers to a new system could hurt the state's health insurance economy.

"I just think there's not convincing evidence we need to do that right now," Darling said.

Nygren said he reviewed the contracts and couldn't see how they would generate Walker's projected savings.

Once the panel receives a formal objection it will vote, he said. Assuming the panel rejects the contracts members will look for savings within the existing insurance model.

The co-chairs' remarks drew a sharp rebuke from Walker, who tweeted "Wrong direction to dismiss $60 million worth of proven savings at a time when some are asking to spend more on transportation."

Walker and Assembly Republicans are currently wrestling with how to solve a projected $1 billion shortfall in the state's roads fund. Walker has proposed borrowing and delaying projects; Assembly Republicans have countered with a complex plan that calls for applying state and county sales taxes to gasoline and moving the state toward a flat tax.

Scott Neitzel, Walker's administration secretary, told The Associated Press in a telephone interview that he couldn't believe Nygren and Darling's stance, especially since Walker was counting on moving to self-insurance to free up the $60 million for public schools.

"We hope it's not the end of the line," Neitzel said. "I can't begin to understand why we wouldn't take advantage of this opportunity."

Sen. Jon Erpenbach, a Middleton Democrat who sits on the finance committee, praised Nygren and Darling in a news release Tuesday evening, saying there's no guarantee self-insurance will generate savings.

"The 250,000 people concerned about who will be their doctor and how this scheme would affect them can breathe a sigh of relief," Erpenbach said. "While the Governor merely has to propose a balanced budget, the Legislature actually has to pass one."

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