Budget Leaders Discuss Medicaid Waiver: Nygren says, "Wisconsin should be rewarded for what Wisconsin has done."

JFC Co-Chairs Say Self-Funding Proposal Unlikely to Move Forward

June 09, 2017

The state Legislature’s Joint Finance Committee (JFC) co-chair Rep. John Nygren (R-Marinette) expressed his views on Wisconsin’s Medicaid waiver during a panel discussion June 5 in Madison hosted by Wisconsin Health News (WHN).

Nygren and JFC co-chair Alberta Darling (R-River Hills) were asked to comment on the Medicaid waiver that has now been submitted by the Wisconsin Department of Health Services to the federal government. WHN Editor Tim Stumm, moderator of the panel, referenced WHA’s public comments on the waiver, calling on Gov. Scott Walker to pursue enhanced federal funding for the childless adult Medicaid population added to the program in 2014. Stumm referred to other states, like Arkansas, who have requested waivers that mirror eligibility levels that have already been in place in Wisconsin.

"I’ve been watching the waivers with great interest. I’m familiar with the story out of Arkansas. Let me just say this, if a state is going to be rewarded for what Wisconsin has already done, Wisconsin should be rewarded for what Wisconsin has done," Nygren said.

"One of the frustrations I have had with the proposal coming out of Washington is that it didn’t reward states like Wisconsin that did it the right way and basically continues to reward the states that went a different course. To me, that is continuing this inequity moving forward, rather than addressing the states that got everybody in poverty covered. Those states should be rewarded, not the states that decided to explode their rolls and now don’t have the resources to meet that," according to Nygren.

Darling and Nygren also discussed a proposal from the Walker administration to self-fund the state employee health insurance program. They continued to voice their concerns about shifting the current fully-insured program into a self-insured model.

"We are really questioning whether this is the right time to get into self-insurance," said Darling. "When we have a very competitive, market-driven health care delivery system in Wisconsin – one of the best in the country – why would we want to shift 250,000 people into a different model? We are wondering if this will jeopardize our very competitive system, especially in areas where there aren’t a lot of choices."

The state’s Group Insurance Board (GIB), which oversees Wisconsin’s state employee health insurance program, has now presented proposed contracts to the Legislature’s JFC for their review as required under 2015 Act 119. Nygren expressed frustration with the lack of information provided by the GIB to the JFC for their review, which is now expected to take place June 15.

"The only oversight by [the Joint Finance Committee] is the ability to vote up or down. The Legislature is basically being told take it or leave it. We don’t have all the information, even the contracts didn’t have the information regarding what the discounts were...we don’t feel like we have been at the table when these decisions are actually being made by the GIB and the Governor’s office."

In his budget, Gov. Scott Walker attributes $60 million in savings by shifting from a fully insured to self-insured model for state employees. The budget co-chairs questioned this savings estimate, pointing to a recent Legislative Fiscal Bureau (LFB) estimation that showed a potential savings figure closer to $47 million.

Nygren stressed that even the LFB figures are an estimate, which is an inherent risk that comes along with self-insurance. "Here is one of the differences with a fully insured plan versus a self-insured plan. If we get [fully-insured] contracts which say they can reduce costs by $40 million, you can take it to the bank. Whereas, with self-insurance, they are all estimates," said Nygren.

In addition, both Darling and Nygren referred to a significant increase in state employee health insurance premium reserves being held by the GIB that exceed the Board’s existing program reserves policy, which states that the program should maintain a fund balance of 15 to 25 percent.

According to the LFB, current reserves exceed the maximum medical claims benchmark (25 percent) by $18.4 million and the minimum medical claims benchmark (15 percent) by $68.8 million. In the same LFB memo, the nonpartisan agency referenced the GIB’s consultant Segal who had recommended not using the 2016 reserves to buy-down premium costs in 2017, partially for the purpose of preparing for a move to self-insurance in 2018.

Both Darling and Nygren indicated that they would not support approving the contracts submitted to the JFC, but did say that they would need to find additional savings to offset what the Governor proposed in his version of the state budget.

"Step one in the process is realizing that some of the reserves should be going toward buying down the cost of state employee health care," said Nygren. "If we say no, we will have to find the savings – we’re not going to ignore the potential for plan redesign as a potential to address the savings the Governor put into his budget. We’re going to have to do that, and I believe we can."

The budget committee co-chairs were also asked about the potential for the GIB to regionalize and consolidate the number of fully-insured health plans that participate in the state employee health insurance program.

"I have some concerns about that, because some of our Senators and Assemblymen have a concern that they need more choices in their areas," said Darling. "We need to have competition all over the state."

Staff for the Department of Employee Trust Funds (ETF), which administers the state employee health insurance program, indicated that the GIB could take this action without approval from the JFC. Commenting on actions the budget committee may take related to the state employee health insurance program, Rep. Nygren hinted at the JFC’s interest to be more involved in decisions made by the GIB.

"If you haven’t sensed it by the comments we have made, there will be an effort again for legislative oversight on group insurance board decisions in this budget," said Nygren.

"We want a very dynamic, competitive health care system that is market driven. That is what the country is trying to get and we have it," said Darling.

To watch the entire panel discussion, visit WisconsinEye’s coverage here.

This story originally appeared in the June 09, 2017 edition of WHA Newsletter