Health plan delays action on premium increases

Posted February 5

— The board governing North Carolina's State Health Plan has delayed action on raising costs for members, and State Treasurer Janet Cowell says a controversial long-term cost savings proposal is "off the table" going forward.

The State Health Plan board met Friday afternoon to consider the costs roughly 691,000 teachers, state employees and retirees will pay for health coverage in 2017.

The meeting came after executives with the plan postponed discussion this week of more significant long-term changes that could have included eliminating a popular health insurance option and the possibility of ending coverage for spouses.

Although those two options were removed from consideration earlier this week, the plan's board had been due to vote on increases to premiums and other costs members pay. But those decisions were delayed as well after appeals from employees groups and others.

"A lot of us didn't start hearing about this until we started getting emails" from constituents, said Rep. Darren Jackson, D-Wake, who has a large number of state workers in his district.

Jackson said the plan's board should delay action until they can consult with lawmakers.

Executive Administrator Mona Moon told board members that delaying the vote would take certain options off the table. Specifically, she said, there would be no time to impose premiums on two of the three plans that have none for individual state workers. However, she said the plan could still raise premiums on any plan that currently requires them. That likely means, she said, higher costs for workers who insure their spouses or dependent children.

Responding to outcry

Lawmakers created the State Health Plan board in 2011 to insulate the benefit from political turmoil, and for the past four years, the Board of Trustees has largely toiled in obscurity.

That changed earlier this week when word that the board might eliminate what's called the 80/20 plan began to get press attention.

Roughly 280,000 plan members use that option, which requires beneficiaries to pay 20 percent of their health costs up to a certain deductible limit. Many were upset with the prospect of losing that option and having to choose between a more costly 70/30 plan or an "employee-directed" plan that amounts to catastrophic coverage plus a health savings account.

Although board members already have said they would not consider eliminating the 80/20 plan on Friday, a plan spokesman left open the possibility the idea could come back up later in the year. But Cowell told a crowded hearing room that the plan's board had withdrawn that option "probably more on a permanent basis."

Moon said that her staff was trying to meet a requirement to cut costs put forward by the General Assembly.

"We became very aggressive, perhaps too aggressive," she said.

During the meeting, board members said they believed that state workers would do better by ditching the 80/20 plan and buying into the employee-directed plan.

David Rubin, a retired University of North Carolina professor, said that relatively new plan is the way to go for many employees but added that it hasn't been explained well.

"People are not picking the CDHP because it's not good for them," said Charles Johnson, a prison employee and member of the board.

Johnson said low-wage workers, in particular, could not afford to pay the upfront costs associated with the plan.

Only about 5 percent of state workers have opted to participate in the employee-directed plan so far.

Becoming a competitive disadvantage

Health plan officials and board members have said they were contemplating the changes in question due to directives from the General Assembly to lower costs and build up a reserve fund. According to the Office of State Treasurer, which provides an administrative home for the plan, North Carolina taxpayers put $2.5 billion toward the plan during the last fiscal year, amounting to more than 10 percent of the state budget.

Employee groups say that, in the long term, employees should not have to shoulder the burden of rising health care costs on their own.

"Sharing the sacrifice between the members of the plan, providers and the General Assembly is the more appropriate response," said Ardis Watkins, the chief lobbyist for the State Employees Association of North Carolina.

Administrators in other areas of state government say the health plan and its increasing costs are becoming a problem.

"The out-of-pocket expenses, the dependent costs and the other items that have been cited are big issues from our standpoint," said Matthew Brody, vice president of human resources for the UNC system, calling the health plan "a competitive disadvantage" in recruiting faculty.


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