Self-Insurance Proposal Could Save Idaho $13M

Sep 28, 2017

Credit Emilie Ritter Saunders / Boise State Public Radio

A new state analysis on switching public employees to a self-insurance model casts doubt on the estimated savings that have become a key talking point in Idaho's open gubernatorial race.

According to Mercer — the state's newest actuarial consultant — Idaho taxpayers could save roughly $13 million during the first year of implementing a self-insurance model.

Under a such a plan, the state would pay for health insurance for about 45,600 state workers and family members directly rather than purchasing insurance through an insurance carrier known as a fully insured model. Idaho currently has a hybrid fully insured plan with Blue Cross of Idaho.

Mercer's savings amount is much more conservative than a 2016 estimate originally boasting savings as high as $60 million over the first three years of implementation and $16 million annually thereafter. That's because Mercer consultants narrowed the focus of cost savings to just the first year of transition.

Idaho lawmakers have considered moving the state to a self-insurance system for several years. Legislative leaders have appointed an interim panel to review the topic for the past two summers with the mission of making a final recommendation before the start of the 2018 session. Mercer's findings were presented to the panel last week.

"We are 90 percent self-funded already," said Jennifer Pike, the state's group insurance program administrator, during the most recent interim panel's meeting. "But we do pay (Affordable Care Act) fees and we do pay premium taxes and we cannot get away from those in our current structure."

The issue has become further elevated in Idaho's competitive 2018 governor's race after Republican candidate Tommy Ahlquist pointed to the possible switch as a way to slash wasteful spending inside the general fund.

Ahlquist, a Boise businessman who is running for elected office for the first time, has released statewide television advertisements promising to cut $100 million in the first 100 days in office if elected governor in 2018.

A key figure in that ad cites the 2016 report outlining a potential $60 million savings by switching state employees to a self-insurance fund.

Ahlquist described the latest findings from Mercer as "hilarious," explaining lawmakers should recognize $13 million is still a significant savings even if it is smaller than the original $60 million estimate.

"This to me is a no-brainer number one," Ahlquist said.

When asked about how much switching to a self-insurance fund would make up of his $100 million pledge, Ahlquist demurred and said, "there are so many more things in the $100 million."

Meanwhile, the Idaho Legislature may be in the process of switching to a self-insurance fund before a new governor takes office in 2019. Lawmakers on the interim panel are scheduled to meet in October to finalize their recommendation.