Local Politics

State health plan needs bailout, premium increase

Posted January 6, 2009
Updated March 9, 2009

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— A $300 million taxpayer bailout is needed to rescue the financially troubled state employee health insurance plan, and the plan's director said Tuesday that state workers will need to absorb higher premiums to keep the plan solvent in the coming years.

Projections of a $50 million surplus in the plan last summer quickly morphed into a $65 million deficit that has continued to balloon in recent months.

"I think we're reaching a very critical point," said Jack Walker, a former health plan director who was rehired to oversee the plan last summer after the financial crisis prompted the firing of director George Stokes.

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 covers 122,000 uninsured children statewide.

Alarming actuarial data about underestimated patient care surfaced in the first two months of 2008, but lawmakers weren't informed of the growing shortfall until June.

Medical health Financial troubles grow at state health plan

WRAL obtained e-mails between Stokes and a consultant that said "the numbers are not good" and that they "kept going south." It was unclear when the e-mails were sent.

"I don't want to get into questioning personalities, but there were forecasting errors made," Walker said. "I would have been very concerned, and I would have raised the flag."

A state audit issued in October called for more oversight of the health plan by an executive branch agency instead of the current combination of a legislative committee and a board of trustees. Walker said more legislative oversight of the plan is needed.

The plan needs an immediate $300 million bailout in this year's state budget, he said. Dependent coverage could go up 30 percent, or higher costs could spread to all co-payments and deductibles to keep the plan on firm financial footing in the coming years, he said.

Overall, the plan will need an extra $1.2 billion by 2011, he said.

Lawmakers last summer suggested raising co-pays to cover part of the health plan's deficit, but they quickly backed off the idea under intense lobbying from state workers and teachers.

"Everyone should give something up, not just (state) employees," Dana Cope, executive director of the State Employees Association of North Carolina, said Tuesday.

Walker said he believes premiums paid by state workers should have increased two years ago.

Cope said the profitable Blue Cross Blue Shield of North Carolina, the state's largest insurer, and the state need to share in the pain of rescuing the health plan.

Correctional officer Wendell Powell, who earns less than $30,000 a year, said paying more for health insurance will crimp his wallet this year, especially since it's unlikely he and other state workers will get a raise in a tight budget.

"It would really hurt. It would be devastating to my family's economy," Powell said. "You're telling me you're going to raise my premiums? You're going to raise my health care (costs)? It's like you can't win."

107 Comments

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  • whatusay Jan 23, 2009

    Why not take the State Pension Fund and put it in the general state fund to balance the budget? That is what the US Government did with the social security fund.

  • pbjbeach Jan 7, 2009

    retired state trooper:

    I to am retired an i am in 100% aggrement with your post here the do what they want to do for who they want to when they want to an this is all attrubatle to the pols both dems an reps although nowdays it is impossibly to tell the difference as that i belived that they are alltrying to turn this nation an state into another pre-war germany politically a fascist state

  • pbjbeach Jan 7, 2009

    THE ULTIMATE REASONING BEHIND THE SUPPOSLY PURPOSE INCREASES ARE DUE TO THE POLITICTIONS IN THIS STATE GIVING INTO THE INSURANCE COMPAINES LOBBYIST AN SELLING OUT OF STATE EMPLOYEES THIS WHOLE ISSUE OF STATE DECEFICTS ARE DIRECTLY ATTRUIBUTALY TO THW SORRY STATE OF THE NATIONAL ECONOMONY AN THE EXCEPTIONAL POOR MANGMENT OF FUNDS IN THE STATE AN NATIONAL BUDGETS TO THE POINT THAT THEY ARE SEEKING TO TURN OVER ANYTHING AN EVERYTHING THAT THE WORKING CLASS PEOPLE OF THIS STATE AN COUNTRY MIGHT HAVE ACCUMULATED IN THEIR LIVES TO COPORATE AMERICA IN ONE FORM OR ANOTHER . AN I THINK TO THE POINT THAT WE ARE BORDING ON A POLICE STATE NATIONAL WITH EVERYING BEING TURNED OVER TO THE ELITIEST IN THE WORLD ECONOMONY

  • really02 Jan 7, 2009

    so heth care needs a bailout?

    Wher is my BAILLOUT????????????/////////

    WHY NOT TAX THE COMPANIES THAT MAKE THE DRUGS?????????????????????????????????//

  • whatusay Jan 7, 2009

    S82R...you are totally correct. What is causing health care cost to go up so fast. 1. Illegals 2.US citizens on welfare 3. medicare 4. medicade. Looks like 70% are getting health care for free while 30% of taxpayers have to make up the difference.

  • S82R Jan 7, 2009

    At the risk of pointing out the obvious- maybe the root of this problem lies with the rising costs of health care. I've skimmed the comments thus far and don't remember seeing anyone mention this, everybody seems to caught up in the fact that it is the "State" Health Plan.

    The whole health care system is screwed up, that's about the only factual thing I can say about it.

  • OhBella Jan 7, 2009

    I don't get it! I am part of the plan but have used it once (for a strep throat test at a CVS QuickMed) during the 3 yrs I have been on it. I should be saving them money. I rarely get sick and if I do, I don't go crying to the doctor to "fix" every boo-boo! They raised the rates 11% last year to keep up (which was more than the "raise") and I didn't complain too much but my goodness! Universal Health care please!

  • scarletindurham Jan 7, 2009

    for those dissing bcbs, I work there and the state employee's benefits are better than mine. I pay my own premiums and have a higher deductible. bcbs is strugging too, but they are being smart about the way things are handled. Raises and bonuses are going to be pretty much nil this year, and they aren't doing much hiring right now. You people won't be happy until everyone is as miserable as you.

  • whatusay Jan 7, 2009

    If state employees can't afford the increase in insurance why don't they quit and work for a private company who will be glad to pay their insurance premiums, and 5 weeks of vacation, and retirement with full benefits after 20 years. All I hear is how much better off they would be working for a private employer, so...do it and stop complaining. Pay up or quit, like the rest of us who do not work for the government.

  • wcnc Jan 7, 2009

    "EVERY year, IF state employees get a cost of living increase, the cost of their insurance goes up only AFTER the raise goes into effect."

    I've got a better one. Wake County employees, who DON'T get a COL raise, used to have their insurance increases effective the August paycheck and their performance raise effective the November paycheck. Nothing like being in the whole a few months.....And then getting a raise that barely covers what you're been paying the past 3 months.

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