Local Politics

State Health Plan deficit balloons

Posted July 15, 2008

— 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.


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  • NeverSurrender Jul 16, 2008

    "Without insurance I'd be as worried about getting overcharged as having to pay my whole bill. It takes proffesionals to keep up with all the bills and what makes sense."


    I think I might eventually write a book on the subject having now been on both sides (consumer and insurance company) on just how appallingly bad honest patients that actually pay their bills are treated by the industry.

    It's funny...I've been saddled with all of the responsibility and none of the prerogative.

    I have no negotiating power over prices and there is no real competition in the industry, particularly for emergent issues. I have no real power over what the insurance company does and when short of a lawsuit.

    I have to sign papers assuming responsibility for charges that are rarely if ever disclosed prior to performance as well as guaranteeing payment even if insurance fails through no fault of my own.

    You don't have to be a professional...you need to know your coverage and document everything!

  • ezLikeSundayMorning Jul 16, 2008

    I don't want a health sysem that chases medical proffesionals away, but I would like a system that shifts a little more in the patient's favor. If I go to a hospital I have no idea what services cost. The doctor leaves the room checking boxes to bill me for who knows what. Then I get 4 different bills from different medical groups.

    I do okay because I'm healthy, but my son had $2000 in medical bills because he needed 5 stitches after normal office hours. Half that just disapeared because we have insurance, then we paid $400. Without insurance I'd be as worried about getting overcharged as having to pay my whole bill. It takes proffesionals to keep up with all the bills and what makes sense.

  • ezLikeSundayMorning Jul 16, 2008

    I would rather have the money to buy my own insurance. I do think the PPO is a much better plan than the indemnity before it.

    I just want some consistency. If you are going to raise my cost, include it in the budget discussions. Don't try to sneak it in at the last minute of a short session.

    I simply don't trust Rand. He has an agenda and will manipulate whatever he needs to in order to get what he wants. I think state employees and all other taxpayers deserve a straight forward accounting of the problem and open discussion on a solution.

    FWIW co pays are a good way to make people consider if they really need to go to a doctor. This works in SHP and could work with Medicaid.

  • NeverSurrender Jul 16, 2008

    "If we went to a single payer system, we wouldn't have to have profit mongering insurance companies and their CEOs draining the health care system."


    You'd have a much bigger worry on your hands...long queues for the simplest of procedures, a much bigger tax burden to support a national health system, bureaucrats deciding the appropriate level of care for you, and doctors fleeing the NHS as fast as they possibly can.

    Look at the UK's National Health Service. It's so appalling that there are really two health care systems over there...one for the rich and the NHS for everyone else.

    Flawed as it is, I'd sooner stick with reforming our current system rather than adopting theirs! And given the plethora of consultants and nurses fleeing the NHS there and in Canada for the employment in the US, it's obvious I'm not alone in that opinion.

  • RonnieR Jul 16, 2008

    Up until the latter part of last century, the SHP was an ok deal, but copays and deductables got so high that I dropped it, even though it was "free", all it did was cause more paper work for me as it was between Mediscare and Tricare. Now NO paperwork!

  • TheWayISeeIt Jul 16, 2008

    We state employees argue and complain a lot. I've worked in the private sector and think that state jobs are pretty cushy in comparison. In terms of health insurance (and I'm only responsible for mine) my BCBS coverage provided by the state is fine for me. I'd rather them pay it than me. I pay for parking monthly, but get to write it off on my taxes. I could park & ride for free, but the bus schedule isn't consistent. Same as co-pays for Rx drugs and doctor visits - write them off on my taxes.

    There are folks who legitimately need multiple doctor visits for their health conditions, but far more who are unhealthy, lazy, think someone owes them something for their "service" (aka holding that chair down) to the state. Those are the ones bilking money from the system and increasing health care costs for the rest of us. We get paid holidays, sick, and vacation leave, the option of working flex schedules.

    How many state employees would give up their free insurance for the extra $ each mo

  • luvtoshag Jul 16, 2008

    I hope the fired administrator of the plan has evidence that the members of the legislature were aware of the problem and chose to ignore it until the budget comes up and now they are crying wolf. Who or what is suppose to check up on the SHP? Is the fired administrator the only one who knows anything about the SHP? If Mr. Rand or any committee he is on was suppose to be checking up on this information, why didn't he or they? I believe that in firing the administrator, they hoped no one would ask any questions and the blame could be put on him. Now I say, put the blame on those whose job it was to follow up and know what was going on before budget time. An independent audit would be helpful but I am sure it won't happen if it means members of the legislature are to blame. And why is the governor not taking a position on this? Sounds like dirty politics at its best.

  • Armando de Cabana Boy Jul 16, 2008

    I don't see why the fix to this problem has to be put on state employees' backs. Alltaxpayers should share the burden. Having said that, we all know that it most certainly will be placed upon our backs as are most budget problems. I think we need to put a revolving door on that building on Jones St. Vote 'em in- then vote 'em out!

  • spartanpirate Jul 16, 2008

    George Stokes is the one that did away with the indemnity plan. George Stokes is the one that gave employee choices. Look where the State Health Plan ended up. George Stokes started lots of programs for certain agencies (not all members are included). George Stokes is the one that held information back from the legislature when asked. He knew what was going on but didn't want to admit that he was taking a THIRD Health Plan defunct.

    The legislatures should find more funds to put into the SHP and not the employees. Our raise will not even put a tank of gas a month in our tanks to come to work. Give the State Employees a break.

    The SHP should look at the exhorbitant salaries that George Stokes gave his friends and past co-workers. A 60+% raise to one employee after he got there. There is something wrong here.

    Good luck to Dr. Walker. We should all wish him well in trimming the SHP budget.

  • The Fox Jul 16, 2008

    [RAND (and Easley) HATES STATE EMPLOYEES] This is true.

    Figures can lie and liars can figure.