Raleigh, N.C. — State legislators are debating some substantial changes to the coverage options currently available to state employees and retirees.
At a meeting of the Joint Legislative Program Evaluation Oversight Committee on Monday, lawmakers clashed over whether to centralize supplemental insurance products available to state workers.
Such plans offer additional coverage for items such as long-term care and cancer treatment. The State Health Plan offers some plans through NCFlex, but hundreds of other plans are currently offered by individual state agencies. A recent investigation by the Program Evaluation Division found little oversight of the outside offerings. Only about a quarter were competitively bid in recent memory, according to the report, and some may not be good deals for the employees who choose to pay for them through their paychecks.
The report's recommendation to centralize the plans, however, met with fiery resistance from the State Employees Association of North Carolina and insurance vendors who do business with individual agencies – as well as from some lawmakers from both parties who represent districts with high populations of state workers.
"There was no raise for state employees this year despite $400 million plus in surplus. We feel that that wasn’t great. That wasn’t right," said SEANC chief lobbyist Ardis Watkins. "It’s harder to explain not giving choice to state employees over how their own money is spent. It adds insult to injury."
When Sen. Ralph Hise, R-Mitchell, asked pointedly whether SEANC is also in the business of offering supplemental plans, Watkins answered that the group had done so to provide competition and does not profit from them.
"What I’m curious about today is why the General Assembly is considering big government taking away individual choice from citizens who happen to be employees because that’s what we’re talking about today," Watkins said. "We believe it would lead to less competition, higher prices and, I’ll be honest with you, state employees aren’t comfortable with sending contracts to Raleigh thinking we’re going to get the best deal."
Watkins warned that some employees could end up paying more for the same options under NCFlex if they were forced to drop long-existing policies and start over with a different company.
NCFlex director Ray Scerri disputed that warning, telling the panel, "We will ensure that the employee does not lose their coverage in whatever way we have to."
That prompted Rep. Nelson Dollar, R-Wake, who opposes centralization, to question whether the state can do a better job than individual agencies.
"It was uncovered that embezzlement was going on in NCFlex for years without anyone ever catching it – a quarter of a million dollars that is known to have been embezzled," Dollar said. "There obviously wasn’t sufficient control."
Rep. Gary Pendleton, R-Wake, was allowed to address the panel to explain a bill he hopes to file that would increase oversight of supplemental plans while allowing agencies to continue to offer their own selections.
Pendleton disclosed that he was an insurance agent for many years and that his son "is trying to get some of this business."
After a lengthy debate over process, the committee eventually voted to draft at least two bills – one based on the report recommendations and the other based on Pendleton's proposal – and consider them at a later meeting.
Medicare Advantage requirement weighed
The panel also considered a draft proposal to force all retirees on the State Health Plan to enroll in Medicare Advantage. The federal plan, a basic version of which is free to retirees over 65, offers some drug coverage.
Backers say the move would save the state up to $64 million per year by shifting costs from the State Health Plan to the federal government.
Program evaluator Kiernan McGorty told the committee that her office has had a lot of calls from retirees concerned about the change. Many, she said, carry three different insurance plans. Switching them from the State Health Plan to Medicare Advantage might change the order in which those insurance plans are tapped, which could cost some enrollees money.
McGorty recommended lawmakers consider amending the bill to direct the State Treasurer’s Office, which oversees the State Health Plan, "to come up with an appeals process for limited exceptions – for individuals who might have individual circumstances that might make the Medicare Advantage not the best plan for them."
The committee voted to revise the bill with the amendment and discuss it again at its Dec. 14 meeting.
Chairman Rep. Craig Horn, R-Union, noted that the General Assembly doesn't come back into session until April. "We’ve got the time to get a good package together," he said.