Local Politics

State Health Plan forecasts $400M shortfall

Posted June 2, 2010

— The man who oversees the health insurance plan for state employees told lawmakers Wednesday that the plan will need an infusion of $400 million to $500 million late next year or early in 2012.

Jack Walker said rising medical costs have led to significant losses at the State Health Plan, and officials cannot stop the bleeding, according to House Majority Leader Hugh Holliman.

"The problem is our costs are rising approximately 10 percent a year at a time our reserves are decreasing," said Holliman, D-Davidson.

Money Health plan costs add to future budget woes

The health plan provides coverage for 667,000 state employees, retirees, teachers and their dependents.

Holliman said lawmakers plan to work with all of the stakeholders in the plan to resolve the situation through some combination of insurance rate increases and cash from the state.

"We have to look at our plan – what we're offering, how we could design the plan differently maybe to save some costs," he said.

Last year, the state spent $300 million in taxpayer money propping up the State Health Plan. A state audit said mismanagement had led to steep losses in the plan.

The cash infusion was part of a $687 million package lawmakers approved that included higher deductibles and co-payments for state workers, increased premiums for dependent coverage and lower benefits for people who smoke or are obese.

Dana Cope, executive director of the State Employees Association of North Carolina, said insurer Blue Cross Blue Shield of North Carolina needs to share in the cost of putting the health plan on sound financial footing. Lawmakers also need to stop managing the plan, he said.

"There has to be some shared sacrifice in this. It can't just be from the employees perspective," Cope said.

"It's ridiculous to have a body of 180 people by committee manage a plan that is bleeding money and hurting the very people that it's intended to help," he said.

Walker's dire forecast adds to the future budget concerns of lawmakers. A penny increase to the state sales tax rate approved last year is scheduled to expire next June, and the state also will lose more than $1 billion in federal economic stimulus funds that has helped plug holes in the state deficit.

"Things are bad this year, but unfortunately, next year is even worse," Senate Minority Leader Phil Berger said. "We need to do something now (with the State Health Plan). If we wait, you're just putting off the situation, and you're making the situation worse."

154 Comments

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  • mwagner52 Jun 3, 6:21 p.m.

    Believe me, state benefits are the pits!! having left the private sector and now on the state plan as a spouse. I paid COBRA payments for maximum amount possible because the premium to get on spouses state plan was more than the COBRA payment. The days of state benefits being something to be envied are LONG GONE!!! If there is one thing our state can do it is screw up...schools, mental health, employee benefits - we really got it going on :)

  • Plenty Coups Jun 3, 5:53 p.m.

    james27613- Doubt you'll get any reasonable response today from the anti-state worker crowd because the facts don't match up with what they want to believe. Never fear though, they'll forget the truth overnight and be back at it tomorrow.

  • james27613 Jun 3, 5:36 p.m.

    Why do they claim mismanagement because of the amount of claims the plan has paid out? This means the plan is working to keep people healthy, give them the care they need and quality of life.

    Some in NC Legislature feel the plan is a cash cow that can be raided at will to finance other pet projects.

  • james27613 Jun 3, 5:33 p.m.

    grimreaper,

    I beg to differ, NC State wages are not inflated compared to private sector. Our turnover rate was very high, people got hired, took all the training they could get then quit and went to work in private sector such as RTP companies etc.

    BTW we received ZERO COLA for 2009 and will get ZERO for 2010.

    Plus we are also behind from the past budget crisis when we got two extra weeks of vacation in lieu of any COLA.

    So we are all four years behind with COLA and have seen double digit increase for SHP premiums each year.

  • nerdlywehunt Jun 3, 5:32 p.m.

    Cancel the plan and give 'em Obamacare! posted by grimreaper

    I will gladly take Obamacare and you may someday have an existing condition that makes Insurance impossible or extremely expensive. Hope by then you develop a little compassion! I know you have it in you, let's hear a great big "drill baby drill" shout out to the old way of doing things......

  • james27613 Jun 3, 5:30 p.m.

    here is the correct link for the rates

    http://statehealthplan.state.nc.us/pdf/emp_rate_sheet_2010-2011.pdf

  • james27613 Jun 3, 5:28 p.m.

    I pay for my family while in private sector you get flex dollars to tailor the plan to your needs, bigger family, more flex dollars.

    See for yourself what we pay for our coverage

    http://statehealthplan.state.nc.us/pdf/health-plan-benefit-summ_2009-2010.pdf

  • james27613 Jun 3, 5:25 p.m.

    I remember when the State needed money it 'borrowed' it from the SHP and NEVER EVER put it back.

  • Bendal1 Jun 3, 3:21 p.m.

    purplepat,

    You are so, so wrong about state employee health insurance costs. My wife had her her own health insurance from her employer that cost her nothing and was better than mine. Then they decided to cut costs and required her to pay half, which still made it better than covering her on my SHP. Then they decided to just terminate all health insurance because it cost too much, so now she's on my plan because that's the least expensive option. Are you saying that the SHP for a worker and spouse (about $650/month) would cost a private company $32,000 a MONTH? You are delusional.

  • Plenty Coups Jun 3, 2:57 p.m.

    "If someone promised you the moon and now you not get it, its not the tax payers fault"

    What is the taxpayers fault is the constant whining and complaining about taxes whenever the prospect of paying state workers comes into play. Its always "not this year" when the subject of meaningful raises comes up.Yes, I know we're going through a recession but the vast majority of private sector companies gave their employees a raise this year.
    See:
    http://www.shrm.org/hrdisciplines/compensation/articles/pages/payraises2010.aspx

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