August 19

Madison - The consequences of self-funding the State Group Health Program go well beyond the change in how health care claims are processed. The results of a request for proposals (RFP) to evaluate self-funding can provide a vendor's projections of administrative costs, but the full impact of the proposed change cannot be determined from proposers' cost projections. The Benefit Services Group principal Gerald Frye elaborates on this assessment in an analysis released today and posted here.

The financial risk of self-funding is a major consideration for the state and taxpayers. As Mr. Frye states: "Under the existing fully insured model, individual health plans are at risk if their medical costs are higher than anticipated. ...Under a self-funded model, taxpayers will be responsible for higher-than-anticipated medical costs, which will make the budgeting process less predictable.

"RFPs are standard industry practice for identifying the services and fees of third-party administrators; however, the results are only as good as the specificity of the questions asked, as well as the granularity (and accuracy) of the data provided by the RFP respondents. Further, there are serious considerations beyond the scope of the RFP process that should be explored...." according to the analysis.

In a June 7 Wisconsin Health News panel discussion, broadcast on WisconsinEye¸ Department of Employee Trust Funds (DETF) Strategic Health Policy Director Lisa Ellinger acknowledged that the impact of self-funding on the broader Wisconsin market is outside the scope of the self-funding RFP. Even the state's consultant, Segal, recognized the full impact of self-funding the State Group Health Program touches many significant issues and "A likely outcome of such a significant project will change the healthcare landscape in the State."

The self-funding RFP was issued by DETF July 22.



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