Walker says it would be ‘unwise’ to reject self-insurance

Fellow Republicans skeptical the plan would materialize in savings.

MADISON, Wis. — Gov. Scott Walker warned his fellow Republicans on Thursday that it would “unwise” to reject his proposal to switch state workers to a self-insurance model, saying ditching the plan would cost the state tens of millions of dollars in savings.

Walker make the remarks to The Associated Press after Republican Assembly Majority Leader Jim Steineke told University of Wisconsin-Madison professors during a campus budget forum that the Legislature will likely reject the plan.

Walker has included provisions in the state budget that would move the state to a self-insurance system. Under such a plan, the state would pay for health insurance for about 250,000 state workers and family members directly rather than purchasing insurance through 17 HMOs. The state would assume the risk for medical claims. The state Group Insurance Board estimates the move would save about $60 million over the two-year budget. State consultants, however, have said the move could either cost the state an additional $100 million a year or save it $42 million a year.

The governor’s fellow Republicans have greeted the proposal with skepticism, saying they’re worried about the state taking on risk and about whether $60 million in savings will actually materialize.

Walker’s budget ties 2 percent raises for UW System employees to the savings, prompting questions from professors about self-insurance’s prospects during the forum put on by PROFS, a nonprofit organization that advocates for UW-Madison faculty. Steineke said he hasn’t been able to find any lawmakers who are excited about self-insurance and reiterated that Republicans are questioning whether Walker’s estimate savings are realistic.

He said the Legislature’s Joint Finance Committee likely will kill the proposal as it revises the budget this spring.

“I think it’s safe to say the Legislature is pretty skeptical of a self-insurance model and whether the savings would materialize,” Steineke said.

Walker told an AP reporter in the state Capitol minutes later that Republicans should stick with the proposal because the savings will go to other areas of the budget such as the UW System and K-12 public education. He said he’s confident the savings estimate is realistic.

“I think they’d be unwise to throw away $60 million,” Walker said. “I think they’d be hard pressed to come up with that money.”