Press Release

For Immediate Release
August 31, 2005 (Updated 9/1/2005)

Contact:

Tom Korpady, Administrator, Division of Insurance Services
(608) 266-0207

Group Insurance Board:
Single-Digit Premium Rate Increases for
Second Consecutive Year

MADISON, (Wis.) – Eric Stanchfield, Secretary of the Wisconsin Department of Employee Trust Funds (ETF), declared that innovative efforts are working to improve healthcare quality and helping to moderate increases in heath insurance costs. Stanchfield was reacting to yesterday’s Group Insurance Board (GIB) news that 2006 premium rate increases from the health plans participating in the State Group Health Insurance Program will average about 9.8% for state and local employers. “For the second consecutive year, the rate increases are in the single digits,” he said. Key quality-of-care and consumer satisfaction measures are also showing improvement. “This is good news, and shows that the GIB’s approach to value-based purchasing is paying dividends for both the state and its employees.”

Stanchfield credits the comparatively low rates of increase to program changes set in place two years ago as a way to provide quality healthcare at a reasonable cost to employers and employees without simply shifting expenses. The changes, initiated by the GIB and Governor Doyle, included adopting for state employees a three-tiered structure for premium contributions, incorporating quality measures into the health plan negotiation process, and providing prescription drugs through a single, Wisconsin-based pharmacy benefit manager (PBM). “The PBM continues to save money for all of our health programs,” said Stanchfield.” “The cost of our prescription drug benefits are trending 5% to 6% below national averages,” he said. “This has been a tremendous success story.”

The news is also good for approximately 7,700 participants in the Medicare Plus $1,000,000 plan: Their premiums next year will decrease by more than 11%. Last year, premiums fell 6% for this plan. Factors contributing to the decrease include PBM program cost containment successes, favorable prescription drug and medical claims experience overall, and the new Medicare Part D prescription drug coverage.

Local employers encouraged to consider program options

The single-digit premium rate increases prompted Stanchfield to suggest that employers participating in the program consider adopting the three-tier premium contribution model option because it provides them additional flexibility in setting premium contributions without curtailing high-quality, low-cost health care coverage. In addition, it provides the GIB with a much more powerful tool to use in negotiations with the health plans. Currently, many participating local employers are using a formula approach similar to the State’s former system of paying up to 105% of the lowest-cost health plan in their service area. The GIB has determined that the “105% formula” has several shortcomings, including a lack of incentive for health plans to hold down premium costs.

Link to 2006 Health Insurance Premium Rates