Lawmakers back off co-pay increases for state workers

Raleigh, N.C. — After intense lobbying from state workers and public school teachers, North Carolina lawmakers on Wednesday backed away from a proposal to raise employee co-payments to cover growing losses by the state employee health insurance plan.

Lawmakers thought the State Health 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.

The plan's administrator was fired two weeks ago because the plan failed to meet its fiscal goals.

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 suggested making state employees pick up some of the tab for the deficit through higher co-pays. The extra $5 to $10 per visit could generate about $40 million in additional revenue a year, officials said.

State Health Plan members bombarded lawmakers with angry phone calls and e-mails after learning of the proposal to raise co-pays.

"Our members have let the Legislature know unequivocally that they will not stand by with manufactured numbers creating cost-shifting to them," said Ardis Watkins, legislative affairs director of the State Employees Association of North Carolina.

"The e-mail consists of frustration, anger, downright outrage," said Rep. Ty Harrell, D-Wake.

House Majority Leader Hugh Holliman said that Wednesday morning, after a caucus of Democratic House members, it was clear the idea would fail if brought to a vote, so it was taken off the table.

"We owe it to our state employees not to make a change this quickly," Holliman said.

Saying the plan was "on intensive care," Holliman said lawmakers would have to dip into the state's reserve fund to shore up the health plan's finances and devise a different long-term solution next year.

"This problem will not go away. It's going to be there when we come back next year, and we're going to have to deal with it," he said.

Lawmakers blamed a combination of rising health care costs, mismanagement and poorly founded projections for souring the health plan's finances so quickly.

George Stokes, the former State Health Plan administrator, has maintained the plan isn't in financial disarray, and SEANC officials also question the doomsday numbers fiscal analysts have presented to lawmakers.

"They're not positive where the problem is. They just keep giving a number that seems to be completely false," Watkins said.