Employer Bulletin

Local Health Employers
Vol. 21, Local F
August 4, 2004

Public Hearing on 3-Tier Premium Contribution Structure for Wisconsin Public Employer Health Insurance Program Set for August 17

The Department of Employee Trust Funds will hold a public hearing August 17, 2004 regarding a proposed rule change allowing the Group Insurance Board (Board) to offer an alternative, optional method of establishing employer contributions for employee health insurance premiums. We invite you to voice your concerns and/or lend your support regarding the proposed rule change at this meeting. You are also welcome to submit written testimony for consideration by the Board.

The proposed rule authorizes the Board to establish tiers for the health plans offered to local government employers. This tiered premium strategy, first provided to state employees in 2004 when legislation authorized the Board to place each of the health plans into one of three tiers, creates incentives for plans to hold down their premium costs and rewards plans for higher quality care. The tiered approach ranks health plans by efficiency and quality of care and includes adjustments based on each plan’s risk pool. Plans providing the most cost-effective, high-quality care are ranked in tier 1. Premium tiers offer financial incentives for employees to choose the more efficient plans, as tier 1 plans have the lowest employee premium contribution while tier 3 plans have the highest. (Note: Although it is possible for tier 1 plans to have higher over-all premiums than tier 2 plans due to risk adjusting, the employee contribution for a tier 1 plan will remain lower than that of a tier 2 plan.)

Employers may set their premium contributions within the guidelines established by the proposed rule and as agreed to under collective bargaining (where applicable). The proposed rule cannot impair existing collective bargaining agreements and will affect only those employers who negotiate and amend their agreements.

Under the proposed rule, local employers’ required minimum contribution would remain unchanged at the present 50% of the lowest cost plan in each employer’s service area (25% for part-time employees). The rule will not eliminate the existing 105% formula for premium contribution, but will provide more options and subsequently, more flexibility for employers. An employer adopting the tiered approach will not be limited to 105% of the premium of the lowest cost plan if the employer provides for employee monthly premium share increases for plans in higher tiers (at least $20 for a single/$50 for a family for each successively higher tier).

A copy of the Notice of Hearing and Proposed Rule and Legislative Council Clearinghouse Report is included for your information. Please contact Arlene Larson at (608)264-6624 or via e-mail at arlene.larson@etf.state.wi.us if you have questions or concerns.