Health insurance choices

Gov. Scott Walker is proposing that state employees be offered a $2,000 incentive to opt out of state health insurance coverage. 

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As a potential cost-saving measure, Gov. Scott Walker is proposing that state employees be offered a $2,000-a-year incentive to opt out of the state’s pricey health insurance program.

Only about 5 percent of state employees currently opt out, generally because they have coverage under a spouse’s health-insurance plan, a study by Deloitte Consulting found. Another 10 percent must opt out because their spouses are also employed by the state of Wisconsin, according to the state-commissioned study.

As of last summer, the state health insurance plan covered about 62,339 state employees and their families.

If offered a $2,000 incentive, an additional 1 to 5 percent of employees might opt out, the company projected.

But such an incentive could cost more than it saves, it said.

About 3,300 employees who currently opt out — and receive no inducements — would qualify for $2,000-a-year payments. Deloitte said the financial impact of the incentive program would range from costing $4 million more a year to saving the state $18 million a year.

“An opt out may create savings,” the company found. “However, if only a small number of employees opt out, this may create an additional cost to the state.”

At least nine other states offer state employees an opt-out incentive ranging from $60 a year in Texas to a maximum $5,000 a year in New Jersey, Deloitte found.

Walker spokeswoman Laurel Patrick said the incentive payments proposed in the governor’s 2015-17 budget are aimed at reducing the cost of “one of the richest health insurance plans in the country” for public employees.

According to a study published in August by the Pew Charitable Trusts and the MacArthur Foundation, the average health insurance premium for a Wisconsin state employee with dependents in 2013 was $1,697 a month, with employees paying about 13 percent of that cost and the state picking up the rest.

Nationwide, the study found that the average monthly premium for state employees with dependents was $1,233. On average, states paid about 84 percent of the total cost of premiums, while employees covered the remaining 16 percent.

In addition to incentive payments, Patrick said the governor’s plan also calls for a savings of $25 million over the biennium due to as-yet unidentified cost-cutting measures related to the state health insurance program.

Wisconsin State Employees Union executive director Marty Beil on Tuesday did not return messages seeking comment.

Consultant hired

Wisconsin’s Group Insurance Board has signed a $408,150 contract with Segal Company, a health care benefits consultant based in Atlanta, to come up with strategies to reduce the roughly $1 billion a year the state spends on providing health care coverage for its employees.

Department of Employee Trust Funds spokesman Mark Lamkins said the goal of the contract is to improve employee health and “increase the efficient delivery of quality health care.” Among the options to be explored is changing to self-insurance, he said.

Segal is expected to make its first presentation to the Group Insurance Board on March 25, Lamkins said.

State Journal reporter Mary Spicuzza contributed to this report.

[Editor's note: This story has been updated to reflect a correction. The original version misstated the national average monthly premium for state employees with dependents. That figure is $1,233.]