Update: Positive discussion with Mr. Nelson (and HR/Finance members of his staff) and Mr. Harris. Covered a lot of ground but will need more discussion...hopefully very soon.
Today, we will meet with Thomas Nelson, Outagamie County Executive and Mark Harris, Winnebago County Executive to present a proposal that could dramatically change the insurance marketplace in the Fox Valley. Below is the memorandum that was sent to both Mr. Nelson and Mr. Harris earlier this week. We are seeking their assistance to convene a meeting of local counties, municipalities, and school districts that would consider this proposal. The text of the memorandum follows. We will provide an update later today.
February 20, 2018
To: Thomas Nelson and Mark Harris
From: Fox Valley Health Care Transformation Initiative
Subject: February 23 Meeting: Outline of Our Proposal
Health care markets are not now, and have never in modern times, been functioning efficiently. Recent massive consolidation of hospitals, physicians, and insurers have exacerbated the inefficiencies.
The result of these inefficiencies and more recent consolidations has been unsustainable increases in prices which are the primary drivers of insurance premium increases. A recent HCCI study for 2016 demonstrates that, excluding pharmaceuticals, Wisconsin, at $5,255.42 per capita, is the most expensive state in the continental US for hospital and physician services for employer sponsored insurance.
Fox Valley medical delivery systems lack both transparency and accountability to the community they profess to serve. First hand we have witnessed their reluctance and refusals to share conflict of interest and financial assistance policies as well as how they select their boards of trustees--which are unelected, unaccountable (to the wider community beyond management) and self-perpetuating. Also, in a sharply worded letter to the IRS acting commissioner, GOP senators Grassley and Hatch have recently seriously questioned whether many not-for-profit hospital systems are meeting their community benefit standards required for maintenance of their not-for-profit status.
There is only one market in Wisconsin, Dane County, where there is any, even moderate, competitive environment for medical and hospital services. The simple reason for this fact is the presence of a large purchasing pool—The State of Wisconsin Employee Trust Fund—that has created a process for obtaining proposals from a number of integrated health systems on a annual basis that rewards both low cost and high quality and has developed a transparent system for communicating that information to consumers. A recent study disclosed that insurance premiums for state employees in Dane County are nearly $2,000 less costly annually than premiums for similar plans in Winnebago County.
Proposal: "VIC": Volume, Incentive, Competition
The Fox Valley Health Care Transformation Initiative (www.foxvalleyhealthcare.com) believes that Calumet, Outagamie, and Winnebago counties, along with local municipalities and school districts, could spearhead an effort to reform our health care market in a manner similar to that which has operated in Dane County since the mid 1980s.
This effort would require the creation of a health insurance purchasing cooperative, in accordance with Chapter 189 of the Wisconsin Statutes, to bring market power (“Volume”)—a large purchasing pool—that would provide incentives (“Incentive”) to the existing provider systems to compete (“Competition”) on the basis of both price and quality which would ultimately lower costs, improve quality and provide better outcomes.
The cooperative, funded by membership fees paid by members, would issue an RFP to the domestic provider systems for a “Value” plan that would differ from existing benefit plans primarily in the way the providers are paid—a global budget or “capitation” that would reward quality and efficiency and punish low value, high cost care. Ultimately any individual member of the Fox Valley would be able to join the cooperative and purchase only the “Value” plan sponsored by the cooperative. Employer members of the cooperative (for-profit and not-for-profit) could offer traditional (“Choice”) plans in addition to the “Value” plan; however, the employer contribution would be capped at the amount of the “Value” plan. Provider systems from throughout the state would be invited to submit bids under the RFP.
Copayments and deductibles for coop members enrolled in the “Value” plan would be dramatically reduced.
Benefits of Our Proposal
Lower and subsequently more predictable medical insurance costs for members of the cooperative.
Greater ability for local governments to predict and control that portion of the tax levy dedicated to employee medical insurance benefits.
Provide an incentive for new employers to locate in the Fox Valley—and existing ones to remain.
Create transparency and accountability in a industry that sorely lacks it.
Ultimately improve health outcomes and redirect resources from the acute care sector to other determinants of health (employment, income, nutrition, etc.).
More discretionary income for individual cooperative members, particularly those in the “Value” plan with lower copays and deductibles, to direct to other businesses—retail, hospitality, etc.— and other household needs (education, housing, etc.)
Goodwill for public sector in the face of challenges from Act 10.