At first glance in the LFB’s analysis (starting on Page 98 of this PDF), it appears that there’s a sizable amount of extra money thrown into the comp reserves for the next budget, including 2% wage increases for many state employees in 2018 and 2019.
Provide, in the 2017-19 general fund condition statement, total compensation reserves of $29,001,600 in 2017-18 and $71,235,800 in 2018-19 for cost increases related to state employee salaries and fringe benefits. Total compensation reserve amounts by fund source and fiscal year are shown in the following table. [Note that compensation reserves do not include amounts for cost increases related to University of Wisconsin-System (UW) employee salaries and fringe benefits. Under the bill, amounts have been separately budgeted within the UW in order to support these costs (see "University of Wisconsin-System")].But those assumptions about $5.7 million in GPR “savings” from the ACA being repealed and another $6.1 million in savings from high-deductible health plans is a hint that not all of these numbers are solid. If ACA repeal fails (and it certainly seems likely that Lyin’ Ryan’s dud of a bill isn’t going through in current form after we found out 24 million people would lose insurance in the next 8 years), then those savings could well disappear over the coming months. This would require some other cuts in the budget, or for the projected salary increases to be taken away.
The GPR and all funds compensation reserve amounts under the bill related to fringe benefits include the following: (a) $18,818,100 GPR ($38,000,300 all funds) in 2017-18 and $30,841,100 GPR ($62,278,800 all funds) in 2018-19 to support prior period and inflationary increases for employee fringe benefits; (b) -$4,082,700 GPR (-$8,244,400 all funds) in 2017-18 and -$8,165,300 GPR (-$16,488,600 all funds) in 2018-19 associated with savings estimated from an anticipated repeal of the federal Affordable Care Act's health insurer fee (otherwise known as a market share fee or premium tax); (c) -$1,493,500 GPR (-$3,015,900 all funds) in 2017-18 and -$2,987,000 GPR (-$6,031,800 all funds) in 2018-19 associated with savings estimated from the elimination of certain domestic partnership benefits under Chapter 40 of the statutes; (d) -$2,722,200 GPR (-$5,497,100 all funds) in 2017-18 and -$3,433,100 GPR (-$6,932,600 all funds) in 2018-19 associated with savings from the state's high deductible health care plan; and (e) -$357,800 GPR (-$722,500 all funds) in 2017-18 and -$610,300 GPR (-$1,232,400 all funds) in 2018-19 associated with savings from employees opting out of the state's health insurance coverage net of the cost to provide $2,000 annual opt-out incentive payments. [For additional information on the elimination of certain domestic partnership benefits, see "Employee Trust Funds."]
The GPR and all funds compensation reserve amounts under the bill related to salaries for state employees include the following: (a) $15,431,200 GPR ($31,161,000 all funds) in 2018-19 intended to support a 2% general wage adjustment for state employees on September 30, 2018, as well as another 2% general wage adjustment for state employees on May 26, 2019; and (b) $4,200,000 GPR ($8,481,300 all funds) annually to support market wage adjustments for state employees in the classified service.
Oh, and dumping domestic partner benefits for state employees is a nice touch, isn’t it? Sure, the arugment is that marriage equality makes that redundant, but I don’t see any corresponding increase in costs from more people taking on family coverage as a result of this. Seems like a classic Walker budget move of “assume all the savings in one side but don’t pay for the other side.”
Speaking of the other side, here’s the second part of that Comp Reserves equation, which builds in savings to the budget based on a switch to self-insurance for health benefits.
Specify that, if the Group Insurance Board (GIB) executes a contract to provide self-insured group health plans on a regional or statewide basis to state employees for calendar years 2018 and 2019 (other than the current self-insured plan known as the "standard plan"), the Secretary of DOA must calculate the GPR savings in 2017-18 and 2018-19 for state agencies other than the University of Wisconsin (UW) System. Further, specify that if such a contract is executed, the Secretary of DOA must reduce the estimated GPR expenditures for compensation reserves in 2017-18 and 2018-19 by an amount equal to the state agency savings, and lapse the estimated savings to the general fund.First, $30 million in savings is far from a sure thing from self-insurance, and that doesn’t even account for the likely higher deductibles and lower amounts of coverage that state employees will have to pay for to account for those “savings.”
Under 2015 Act 119, the GIB must notify the Joint Committee on Finance if it intends to execute a contract to provide self-insured group health plans on a regional or statewide basis to state employees. Under the act, the Committee is provided 21 working days to review the proposed contract. If the Co-chairs of the Committee notify the GIB within the period of review that the Committee has scheduled a meeting for consideration of the contract, the GIB may not execute the contract without the approval of the Committee. If a meeting is not scheduled, the GIB may execute the contract. The general fund condition statement in the bill assumes lapses of $10,147,000 in 2017-18 and $20,294,100 in 2018-19 associated with GIB executing a contract to provide self-insured group health plans.
And second, I don’t see any item mentioning that self-insurance would likely get more claims if the Trump/RyanCare bill passes, because spouses of state workers would be more likely to be kicked off of their own job’s health care (or need cheaper health insurance as the GOP bill jacks them on the exchanges), and go onto the state insurance as a result. Those claims would drive the costs of self-insurance up (and there goes your $30 mil in savings), and likely would drive up the premiums that state taxpayers pay as well.
Like a lot of other things, the LFB report indicates that the “savings” of self-insurance seem to be based on a hope and a prayer. And with the fate of health insurance in the next few years being very up in the air due to GOP foolishness in DC, it seems like a very bad gamble to take. This is true both for purposes of balancing the state budget, and also for the ability of state employees and their families to receive adequate health care.