Press Release

For Immediate Release
June 19, 2001

Contact: Pam Henning, (608) 267-2929

Group Insurance Board Adopts New Measures to Curb Rising Health Insurance Premium Rates

MADISON -- Eric Stanchfield, Secretary of the Wisconsin Department of Employee Trust Funds (ETF), announced today that the Group Insurance Board adopted significant changes to the upcoming health insurance premium rate development and negotiation process, during which participating Health Maintenance Organizations (HMOs) compete for the state's business. The changes are designed to prevent excessive or unwarranted rate increases by health insurance plans participating in the State of Wisconsin Group Health Insurance program for 2002.

The Board approved steps to put individual health insurance plans on notice that they will not be allowed to participate in the program if the Board deems their final premium bids unsatisfactory or not justified.

Tom Korpady, Administrator of the Division of Insurance Services, says the Board intends to critically examine all proposed premium rate increases for coverage year 2002. Negotiations between the Board and the participating plans on the proposed premium rates occurs in early August, with final rates set by month's end.

Korpady says some of the health insurance plans have tentatively suggested premium increases for next year that "seem out of line, based on their claim experience – the things that happen to their members that drive costs up or down. The proposed rates we're hearing about may not be supported or justified by the plan's claims experience."

Korpady says the procedural changes essentially 'tweak' the current process without becoming too cumbersome. The major changes are as follows:

• Upon review of the claims and other data supplied by each plan, the Board's actuary will independently develop a recommended premium range for each plan.
• Plans with proposed bids that fall outside of the recommended range will be called in for negotiations in early August to review the data, discuss variances, and clarify the Board's expectations. Following this, all plans will be offered the opportunity to submit final best offers by August 15.
• Plans that are not able to justify the final premium rate increase submitted will be notified that the Board will be advised to drop that plan from the program. The Board will notify plans of its final decision by September 1.

"By contacting individual plans before their final bids are in place, the Board will give them a fair chance to either demonstrate the validity of their bids or to adjust their bids to meet what is supported by the claims data," says Korpady. "This change also strengthens the Board's position in the negotiation process, and should help to ensure that the state and its employees pay only their fair share."

Related Facts:

• The Department of Employee Trust Funds and the Wisconsin Group Insurance Board have statutory authority for Group Health Insurance program administration and oversight.
• HMO plans follow Group Insurance Board guidelines for eligibility and program requirements.
• The Group Health Insurance program currently contracts with 18 HMO plans and four fee-for-service plans.

Who is eligible to participate in the program?

• State employees participating in the Wisconsin Retirement System (WRS).
• Elected state officials and members or employees of the Legislature.
• University of Wisconsin System - visiting faculty; graduate assistants employed at least one-third of full-time.
• Only blind employees of Workshop for the Blind with at least 1,000 hours of service.
• State retirees, their surviving spouses and dependents, and former employees who have 20 years of state service.
• Local government employees participating in the WRS whose employer elects to participate.
• Local government retirees and employees who terminate employment after age 55 (age 50 for protectives) and have 20 years of creditable service.