Governor Walker’s self-insurance plan rejected by budget committee

Gov. Scott Walker

MADISON — Gov. Scott Walker’s proposed switch to a self-insurance plan for state workers was rejected Thursday in a rare bipartisan vote by the Wisconsin Legislature’s budget-writing committee, a defeat for the governor who had lobbied strongly to make the change.

The Joint Finance Committee voted 16-0 to reject proposed self-insurance contracts in its first meeting in two weeks as budget talks have stalled amid disagreements over K-12 school funding, roads and taxes. The panel wasn’t taking up any of those issues Thursday, but in addition to self-insurance it did plan to vote on prison-related issues, including hiring more guards at the troubled Lincoln Hills youth facility.

Walker has been lobbying for his self-insurance proposal, under which state workers and their families are insured by the state rather than purchasing coverage through private HMOs. The state would assume the risk for medical claims that exceed premiums.

Republicans have been cool to the idea, fearing the move could result in higher premiums, not as much savings to the state as Walker projected and damage the state’s private health insurance industry.

“This is the wrong time for us to make major shifts in the marketplace,” Sen. Alberta Darling, co-chair of the committee from River Hills, told reporters before the vote.

Walker has argued that not accepting his self-insurance plan will lead to steep 10 percent health insurance premium increases for state employees next year. The Wisconsin Association of Health Plans, an advocacy organization for 10 health plans that currently cover state workers, said that estimate was overblown.

Under the current system, total costs to 250,000 public workers and their families covered under the existing plan — including premiums — could not increase more than 10 percent in each of the next two years, committee co-chair Rep. John Nygren said Thursday.

Walker counted on the $60 million saved from the self-insurance move to pay for salary increases for University of Wisconsin workers and to increase funding for K-12 schools. The budget committee planned to recoup $63 million by tapping nearly $26 million in insurance reserves, $23 million in negotiated savings and $15 million through plan design changes and other means.

The current budget runs through the end of June, but the government won’t shut down even if Republicans who control the Legislature can’t reach a deal by then. Instead, current funding will continue until a deal is reached. Assembly Speaker Robin Vos said Wednesday he didn’t expect the budget to pass before July 1.

Nygren said he thought Senate and Assembly Republicans were closer on a deal on education funding than they are on transportation. Darling said the budget committee could meet again next week to vote on K-12 school funding and taxes.

Other issues the committee planned to vote on Thursday included:

— PRISON BEDS: Walker devoted $17.2 million over two years to support 1,052 contract prison beds to house state inmates in county jails and federal facilities. But that is 1,208 fewer beds than the Department of Corrections said was needed. The agency’s estimate was based on projections that tougher drunken driving penalties would create 1,421 new inmates over the next two years. Walker’s administration doesn’t believe the influx of inmates will be that steep. The governor’s budget also calls for expanding the earned release program and capacity at the Racine Youthful Offender Correctional Facility, moves Walker argues will reduce the need for additional contract beds.

— YOUTH PRISON: Walker wants to spend $1.3 million to hire eight additional guards at the troubled Lincoln Hills prison for juvenile boy offenders. The additional staff would be used to help the prison in Irma come into compliance with staff-to-juvenile ratios mandated by the federal Prison Rape Elimination Act. The prison currently averaged one guards to 16 inmates during waking hours and one guard to 34 inmates during sleeping hours as of the end of April, according to the nonpartisan Legislative Fiscal Bureau. Federal law requires a ratio of 1-to-8 during waking hours and 1-to-16 during sleeping hours. Walker’s plan would reduce the average ratios to 1-to-13 during waking hours and 1-to-29 during sleeping hours.