Why shouldn’t Gov. Walker put out a request for proposal (RFP) for self-insurance for health care for the state’s 236,000 covered lives?
Consider: 60 percent of employees in the private sector work for companies are self-insured; most of the companies in the health business, such as healthcare insurers and hospitals, are self-insured for their own employees; and some 20 other states self-insure.
The players who presently have the state’s business, more than $1 billion per year, are predictably screaming that nothing good can come from such a change. Most are organized as HMOs – Health Management Organizations – a provider/insurer combination, and they indeed do offer deep discounts if employees will confine themselves to narrow networks of hospitals, clinics and doctors.
But many employers and consumers don’t want their choices of doctors limited. They want to go to the best orthopedic surgeon or best cardiologist, regardless of network. To that end, most self-insured payers have health plans that allow such selections for value-based care.
Further, an analysis of heart operations by the Wisconsin Collaborative on Health Care Quality shows that there is an inverse correlation between price and quality. In other words, when you buy your heart bypass, go to the least expensive provider out there.
It seems counter-intuitive, but those of us in manufacturing know that when we improve quality by driving defects and waste out of our operations, costs go down. Toyota taught the world that cheaper can be better. That’s one reason to go self-insured and to go for broad choice.
Another is that when an employer takes on the risks of health costs by going self-insured, you can bet that employer, in this case potentially the state, gets serious about managing health costs. Self-insurance puts the emphasis on management. That means management of workforce health, because that’s where most of the costs lie – in unhealthy people.
For a sterling example of what self-insurance can do for an employer in the public sector, let’s look at the West Bend School District. It went self-insured long ago, and that has led the district to innovative management.
It was one of the first to bail out of the horribly expensive union health plan. It was one of the first districts to adopt a consumer-driven health plan. And, this month, it became one of the first to install an on-site medical home for its employees and their dependents.
I toured the new clinic in the lower level of the district’s headquarters last week, and it looks to be off to a flying start.
The district offers major incentives for taking health seriously, so it will be important to learn how the combination of rewards and available proactive care work.
Bekki Scheel, the physician’s assistant who staffs the clinic, reported an influx of users from right from the start. “It’s been great,” she said. Three people have already quit smoking.
While the on-site clinic has not yet had an impact on district costs, the previous moves have allowed it to deliver a full benefit package for about $10,000 per employee. That is about half of what many school districts pay.
The savings allow the district to make investments in education that would be impossible otherwise.
The success of the West Bend District in lowering costs while improving workforce health should send a message to Madison that it needs to take an honest look at a better way to deliver and pay for care.
Despite the hue and cry from the incumbents, the RFP process for coverage of state employees should provide such an honest look.
