A Periodic Publication of Wisconsin's Association of Career Employees
By Sally Drew, President
The ACE Board recently sent two letters to Joint Finance Committee (JFC) members. One concerned the state employee opt-out provision from state health insurance and the other concerned the incorporation of the Office of State Employment Relations (OSER) into the Department of Administration (DOA). Sally Drew and Kathy Fullin also meet with Representative Barca and staff for Representative Vos and Senator Shilling, who serve on the Joint Committee on Employment Relations (JCOER). They discussed with them the state budget topics and ACE goals for the compensation plan. You can read a copy HERE of the ACE letters sent to each member of the JFC. They are also on the ACE website.
The Joint Finance Committee dealt with both issues recently.
State Health Insurance opt-out provision
Issue: In the 2015-2017 budget request, Gov. Scott Walker proposed that state employees be offered a $2,000 annual incentive to opt out of the state’s health insurance program.
Deloitte Consulting analyzed the potential impact of the opt-out program and concluded that the financial impact of the incentive program would range from costing $4 million more a year to saving the state $18 million a year. “An opt-out may create savings,” the company found. “However, if only a small number of employees opt out, this may create an additional cost to the state.”
As of last summer, the state health insurance plan covered about 62,300 state employees and their families. About 15 percent of state employees currently opt out, generally because they have coverage under a spouse’s health insurance plan elsewhere (5%) or because both spouses are employed by the state (10%). Employees who opt out of state insurance would still need to have insurance or pay a penalty as a result of the Affordable Care Act.
ACE believes that it is unlikely that a large number of employees will opt-out since 1) they may have difficulty finding comparable coverage elsewhere and 2) the federal penalty for not having any insurance will gradually grow larger. Thus, instead of saving money, the opt-out proposal could well lead to increased costs for the citizens of the state.
JFC Action: The JFC approved the $2,000 annual incentive for an employee to opt out of the state health insurance program. In addition, the JCF approved a motion that provides that the following state employees would not be able to receive a $2,000 stipend: (a) any employee who opted-out in CY 2015; and (b) the employee with no group health insurance coverage when married state employees or state employees in a domestic partnership are both employed by the state. Source: Tarna Hunter, Employee Trust Funds Legislative Liaison
OSER integration into DOA
Issue: In the 2015-2017 budget request, Governor Scott Walker proposed that OSER be incorporated into rather than administratively attached to the DOA.
Under the current law, the administrator of the Division of Merit Recruitment and Selection must be nominated by the Governor after a competitive process, and with the advice and consent of the Senate, appointed for a five-year term. Under the budget bill, the director of the Bureau of Merit Recruitment and Selection under DOA would serve at the pleasure of the Secretary of DOA, with no involvement by the Legislature. The bill would delete the current selection and hiring process for the administrator of the Division of Merit Recruitment and Selection. The process under the current law was designed to assure that the director of the Division of Merit Recruitment and Selection was hired for merit and fitness. This person is responsible for assuring the rest of civil service employees are also hired for merit and fitness.
ACE is very concerned about the potential loss of political independence overall for state personnel policies and in particular about the changes in relation to the administrator of Merit Recruitment and Selection. ACE believes the Legislature should be concerned about the potential for the Executive Branch to drastically change the composition of the state workforce as each administration takes office. If the primary person responsible for overseeing civil service hiring is now an at-will employee, this is likely to compromise the entire civil service system.
In addition, another problem is also created by the change in structure. The position becomes an unclassified bureau director under the budget bill. Bureau director positions have been included in the classified civil service. This change sets a precedent for agencies to potentially request that other bureau directors be unclassified.
JFC Action: JFC approved the incorporation of OSER into DOA despite the above issues. Chris Taylor, a member of the JFC raised the issue about the structural change whereby the administrator of Merit Recruitment and Selection becomes a bureau director and urged JFC to change this provision. Source: Maggie Gau, staff, Chris Taylor’s office
Group Insurance Board Actions
The Group Insurance Board met on May 19 and approved changes to the state employee health insurance program, which will take place beginning January 1, 2016. The ETF Correspondence Memorandum is available at http://etf.wi.gov/boards/agenda-items-2015/gib0519/item3c.pdf
In a May 19 article, the Wisconsin State Journal identified the following changes approved:
- Out-of pocket limits will increase from $500 to $1,000 for single coverage and $1,000 to $2,000 for families.
- Deductibles will be increased to $250 for individuals and $500 for families.
- 10% coinsurance will be replaced with co-payments of $15 for regular doctor visits and $25 to visit specialists.
- The patient cost of prescription drugs will be increased from a maximum of $50 to a maximum of $200.
- Members with serious disease and a likely survival of less than six months will be offered Advanced Care Planning (ACP) and/or a palliative care consultation. When appropriate, such individuals will receive multidisciplinary palliative care in their homes.
- The state’s contribution to health savings accounts will be increased from $170 to $750 for single coverage and $340 to $1,500 for family coverage. This change will require increased funding.
The total program savings required by the 2015-2017 State Budget is $81 million in all funds over the 18 months from January 1, 2016 – June 30, 2017. To achieve the targeted savings over the 18-month timeframe would require the implementation of cost-containment strategies equal to $54 million in savings for 2016. According to the Wisconsin State Journal, the changes would save $85 million. The changes are designed to meet the required cost savings and to allow the state to escape the “Cadillac” tax included in the Affordable Care Act, which starts in 2018.
- Coverage for therapies associated with habilitative services will be added. This change will require increased funding.
According to Tarna Hunter, ETF Legislative Liaison, the medical and pharmacy benefit changes affect both employees and non-Medicare eligible retirees. For retirees who are eligible and enrolled in Medicare Part A and Part B, the increased pharmacy cost would be applicable, but not the medical deductible, out-of-pocket limit, and copays. Medicare supplemental insurance is not subject to the deductions and out of pocket limits, but would be subject to the pharmacy changes.
Currently, health insurance changes do not go to JCOER. Motion #440 passed by JCF provided that any proposed changes to the state group health insurance program be submitted to the JCOER by April 1. JCOER may approve, disapprove or approve with modifications by May 1. Recommendations must be submitted to the Governor for approval or rejection. If this provision is included in the budget, changes for 2016 would need to be submitted to JCOER within 30 calendar days after the effective date of the final budget.