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
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."
- 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
- 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