Press Release

For Immediate Release
August 29, 2007

Contact:

Bob Conlin
Communications Director
(608) 261-7940

Strategies Keep Health Insurance
Program Costs in Check

MADISON, (Wis.) – Health insurance premium rate increases for members covered under the Group Health Insurance Programs will, for the fourth consecutive year, average in the single digits next year. The Group Insurance Board (Board) made the announcement at yesterday’s meeting. The program covers more than 230,000 state and local government employees, retirees, and their dependents.

The rate increases for the health plans participating in the program in 2008 will average less than 7%. Rates may be higher or lower for some local government employers, explains David Stella, Deputy Secretary of the Department of Employee Trust Funds (ETF), “but overall, this is very good news for our program participants and employers. The fact that rate increases have been held down without cutting benefits can be directly attributed to the cost containment strategies set in place four years ago. It’s a significant achievement.”

Initiated by the Board and the governor, the strategies 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 an innovative, transparent, prescription drug purchasing pool, operated by Navitus Health Solutions, a pharmacy benefit manager.

“The state’s tiering process uses consumer pressure to keep costs down and quality standards high without resorting to benefit cuts or shifting costs through higher copayments,” said Tom Korpady, administrator of ETF’s Division of Insurance Services. “The health plans and providers are sensitive to this pressure and have responded by holding down premium increases.”

One notable change for next year includes the expanded availability of Tier 1 plans to most areas of the state, especially in the northwest counties. This is particularly good news for state and university employees in Pierce and St. Croix counties.

In addition, all of the health maintenance organizations participating in the program for state employees will offer some dental benefits next year. Eight plans in the local government program will offer employees dental coverage through nine networks.

Monthly premiums will increase by about 7% for the approximately 10,200 participants in the state’s Medicare Plus $1,000,000 plan. This group experienced premium decreases over the past three years, but higher than expected medical costs in 2007 required a modest premium increase for 2008.

Additional information

• The Department of Employee Trust Funds and the Group Insurance Board have statutory authority for program administration and oversight. Health maintenance organization (HMO) plans follow the Board’s guidelines for eligibility and program requirements. All HMOs offer a prescribed benefit package called Uniform Benefits.
• HMOs participate in an annual, competitive premium rate bid process.
• The Standard Plan and State Maintenance Plan (SMP) are self-insured by the Board and administered by WPS Health Insurance.
• The pharmacy benefit is self-insured by the Board and administered by Navitus Health Solutions.