State Health Plan deficit balloons
Posted July 15, 2008
Raleigh, N.C. — A sudden financial meltdown could bankrupt the state employee health insurance plan by next March, analysts told state lawmakers Tuesday.
Two weeks after George Stokes was fired because the State Health Plan failed to meet its fiscal goals, state lawmakers learned the plan's finances are more precarious than previously thought.
Lawmakers thought the plan had a $50 million surplus until learning last month that it actually had a $65 million shortfall. After further study of the plan's finances, analysts said Tuesday the plan could have a deficit of about $250 million within a year.
"There's nothing positive about any of this. It's going to cost us a lot more money," Senate Majority Leader Tony Rand said.
A combination of rising health care costs, mismanagement and poorly founded projections were blamed for souring the health plan's finances so quickly.
The State Health Plan provides medical insurance for almost 650,000 state workers, public school teachers and retirees. It also administers N.C. Health Choice, which provides coverage for 122,000 uninsured children statewide.
Lawmakers have suggested making state employees pick up some of the tab for the deficit through higher co-pays.
Under one basic-coverage proposal, the employee share for a regular doctor visit would jump from $25 to $30 and from $50 to $60 for a specialist. Non-generic prescriptions would increase by $5 or $10.
"I think this is a knee-jerk reaction to shift some cost to the employees in a historic move. It's never been done in the second year of the health plan. This would be unprecedented," said Ardis Watkins, legislative affairs director for the State Employees Association of North Carolina.
Watkins and other SEANC officials complained that the $40 million state workers would pay in in higher co-pays would wipe out pay raises.
Lawmakers said they might have to raid the state's rainy day fund for the rest of the health plan bailout.
"In the position we find ourselves, I don't know what else to do," Rand said.