Several changes to the state health insurance program recently went into effect. The changes were enacted as part of Wisconsin Act 10, the 2011 Budget Repair Bill, and Wisconsin Act 32, the 2011-13 Biennial Budget Bill.
For most state workers, the first change was implemented late last month. State employees, including faculty, must now pay 12.6 percent of their health care premiums. Employees opting for the single plan will pay between $84 and $226 per month, depending on which plan is chosen. The cost for the family plan ranges from $208 to $567 per month.
Less well-known are changes that include coinsurance payments for medical services. Language was inserted into Act 10 which stated:
The group insurance board shall design health care coverage plans for the 2012 calendar year that, after adjusting for any inflationary increase in health benefit costs, as determined by the group insurance board, reduces the average premium cost of plans offered in the tier with the lowest employee premium cost under section 40.51 (6) of the statutes by at least 5 percent from the cost of such plans offered during the 2011 calendar year. The group insurance board shall include copayments in the health care coverage plans for the 2012 calendar year and may require health risk assessments for state employees and participation in wellness or disease management programs.
The state’s Group Insurance Board (GIB) is part of the Department of Employee Trust Funds (ETF). GIB consists of members appointed by the governor — consistent with statutory guidelines mandating membership that includes a state employee, a local government employee and a retiree — as well as Ex Officio members who are designees of the governor, attorney general, director of the Office of State Employee Relations (OSER), insurance commissioner and state administration secretary. GIB approves changes to benefits consistent with state law.
In advising the GIB on how to implement changes called for in Act 10, ETF staff drafted a memo providing options, all of which paid for the mandated 5% cut in cost by shifting health care costs to employees. The memo offered three options: 1) Increasing copayments; 2) Implementing coinsurance; or 3) Increasing deductibles.
GIB members engaged in extensive debate over which option to choose, with members representing employees preferring the deductible option and those representing Governor Walker’s administration and the Attorney General’s office preferring coinsurance. Members in favor of the deductible option noted that it typically results in a lower out-of-pocket cost per member (see page 3 of the ETF memo). Those favoring coinsurance liked the idea of having employees more invested in their own coverage and aware of the actual costs. Ultimately, the committee voted 5-4 in favor of the coinsurance option.
The following changes will be implemented:
- Coinsurance for medical services — participants must pay 10 percent of costs up to an annual out-of-pocket maximum of $500 for an individual and $1,000 for a family. Coinsurance for families is cumulative; once $1,000 is paid by any combination of family members, coinsurance ends for the year.
- Routine preventive care is not subject to coinsurance. Examples of this type of care will be detailed by ETF later this fall.
- Coinsurance will be billed to the member. Payment is not required at the time of service.
- Coinsurance is applied to the fee negotiated by the plan. If the fee is discounted by the provider, the member pays coinsurance based on that amount.
- Emergency room copayments increase from $60 to $75. The fee is waived if admitted and does not apply to the out-of-pocket maximum.
Federal rules prohibit making changes to one’s coverage mid-year, but exceptions are made when significant cost increases occur. According to the Department of Employee Trust Funds, an employee may change or cancel coverage if a Health Application/Change Form is submitted within 30 days of the date of the first paycheck from which the increased premium is deduction (October 1 for faculty on 9-month appointments).