Taxpayers in Wisconsin should be encouraged that Gov. Walker has finally put his toe into reform waters for the delivery of health care to state employees.
The governor did some badly needed budget reform when he raised the contribution of state employees to 12.5% of costs as part of the notorious Act 10. That’s about half the private sector average contribution. But cost shifting to employees is not health care reform.
Now, as part of the budget process, Gov. Walker is proposing that the Group Insurance Board that handles health care budgets for 65,000 state employees be required to offer a consumer-driven health plan (CDHP). Study after study over the last decade since Health Savings Accounts were created show that savings of 20% to 30% result when incentives and disincentives are put into place.
High deductible plans, offset by a Health Savings Account (HSA), give funds to employees to use for health care and makes them responsible for managing the money. Almost immediately, inappropriate and excessive utilization drops like a rock.
No more does an employee call an ambulance when they don’t need one. It’s a $1500 ride, or more. No more do they use an emergency room when they don’t need one. No more do they demand a brand-name drug when a generic would work.
This is proven, audited, non-debatable stuff. Ten years ago, it was a risk to install a CDHP program. No more. Just do it.
About half of all private payers have done it, including almost all of the health insurers for their own workers and health providers for their employees. You’d think they, of all payers, would know the territory.
One small governmental entity has shown the way. The West Bend School District went self-insured years ago, then bid out its network needs, then went CDHP and now is putting in its own on-site clinic. It’s in the vanguard in learning from the private sector payers about what works and being a fast-follower.
Result? It is delivering first class health care for less than $10,000 per employee. That’s half of what many districts are playing for fully insured plans.
Think about the numbers. At a savings of $10,000 per employee and about 1000 employees, it is saving the taxpayers $10 million per year.
The district is giving raises; it has found funds for deferred maintenance; it found $5 million in reserves to put against a $25 million bond program for school construction.
The state, which, for some convoluted reason, is not yet self-insured, spends more than $1 billion on state employees’ health care. Huge savings are waiting to be had if it goes self-insured and consumer-driven.
That same arithmetic applies to nearly every public body from the Pentagon, which spends more on health care than on weapons, to city halls.
So, when you hear government leaders complain about budget cuts, ask them if they have taken proven steps to manage their under-managed health costs. If they haven’t, turn off your hearing aids.
It just takes leadership, like Gov. Walker is starting to demonstrate.
John Torinus is chairman of Serigraph Inc. in West Bend. He is involved with several business and civic organizations and is the author of “The Company That Solved Health Care.” His blog appears regularly at www.johntorinus.com and is republished with his permission by BizTimes.