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Blue Cross: Idaho could face risk under self-insurance plan

November 8, 2017

BOISE, Idaho (AP) — Health insurance officials warned lawmakers Wednesday that switching public employees to a self-insurance model could place the state at a greater financial risk.

Dave Jeppesen, chief marketing officer with Blue Cross of Idaho, told a legislative working group that Idaho’s existing program allows the state the flexibility to decide what health benefits it wants to offer to employees without assuming the risk for medical claims.

Lawmakers have long debated whether Idaho should pay for health insurance for about 45,600 state workers and family members directly rather than purchasing insurance through a carrier, known as a fully insured model. Legislative leaders appointed an interim panel to review the topic two years ago with the goal of having a final recommendation before the start of the 2018 session.

Idaho is just one of two states to have a hybrid fully insured plan with an insurance carrier, Jeppesen said. Most states have traditional self-insurance models.

Under Idaho’s plan, state officials send Blue Cross of Idaho a payment each month to cover that month’s estimated medical and dental claims. Blue Cross of Idaho then sends the state any leftover money with interest if the claims come under the estimated payment amount.

Likewise, for any claims higher than the monthly payment, the state must cover up to 110 percent of the higher costs. Blue Cross of Idaho would pay for anything higher than 110 percent of the state’s claims payment, but that has never happened under Idaho’s hybrid model.

“This is a really good model for the state of Idaho, you get the best of both models,” Jeppesen said. “Please do not underestimate the risk.”

The benefit of switching to a self-insurance model has faced increased scrutiny as Republican gubernatorial candidate Tommy Ahlquist has argued that the switch could save Idaho as much as $60 million over three years.

Ahlquist, a Boise businessman running for elected office for the first time, has ran several television campaign advertisements promising to cut $100 million in state spending during his first 100 days in office, if he is elected next year.

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

That figure, however, has become contested after a report issued earlier this year put the savings at $13 million for the first year of operation. The analysis did not forecast how much Idaho would save over three years, but it did warn that switching to a self-insurance model would require the state to take over administrative costs and build up a reserve to cover unexpected high medical claims.

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