Press Release

For Immediate Release
August 27, 2002

Contact: Pam Henning, (608) 267-2929

State Group Insurance Board Finalizes 2003 Health Insurance Premium Rates

MADISON -- Eric Stanchfield, Secretary of the Wisconsin Department of Employee Trust Funds (ETF), announced today that the Group Insurance Board approved premium rates for health insurance plans affecting over 200,000 state employees, retirees, and their dependents.

Premium rates for Health Maintenance Organizations (HMOs) under the state's group health insurance plan will increase an average of 13.4% next year. "We should never be pleased when we see double-digit rate increases," says Tom Korpady, Administrator of the Division of Insurance Services, "but these rates are at the very bottom of the range of similar plans in other Midwestern states, who are reporting rate increases in the 17% to 20%-range, and about half of the 25% increase reported by California's public employee retirement system."

Rate increases for the fee-for-service (self-insured) plans will increase 13% for the Standard Plan, 17% for Standard Plan 2, and 9% for the Medicare Plus plan. The Board also expressed concern over the viability of the Standard Plan, noting that it will assess the need for continuing this plan in its current form when it considers recommendations of the Board's health plan study group in November.

"The state is doing relatively well, but the national health care delivery system is broken," says Stanchfield. "Physician, hospital, and drug costs are escalating at double digits across the country. Large premium increases can not be endured year after year. Even though we are doing better than most purchasers, we – along with our public and private partners -- must find ways to improve the system and bring it under control." Stanchfield credits the Board's tougher premium negotiation strategy with saving the state over $5 million dollars this year. He also noted that State employees contributed to the lower cost increases by their willingness to choose lower cost plans, which often means giving up the freedom to choose any provider.

For the past year, a Board study committee has undertaken a broad review of the benefits, costs, and delivery of state employee health insurance with the goal of making the overall program more efficient and cost effective. The Board will release its recommendations in November.

Says Korpady, "As in the past, the health insurance program is designed to encourage and take advantage of competition. What we're seeing -- large provider groups such as those in Dane County that are competing through their plans – exemplifies this. The result is lower rates of increase than in areas where there is less competition. Competition works when you have it."