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Consultant: State Health Plan needs overhaul

Posted August 12, 2010

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— An outside consultant hired to review the operations of the health insurance plan for state employees and retirees told state lawmakers Thursday that the plan should be restructured and should rework its contracts to limit expenses.

Rising medical costs have led to significant losses at the State Health Plan, and officials haven't been able to stop the bleeding. Last year, the state spent $300 million in taxpayer money propping up the plan, and its executive director told lawmakers in June that the plan would need another infusion of $400 million to $500 million late next year or early in 2012.

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

Plan officials paid Navigant Consulting Inc. $1.2 million to find areas for improvement after a state audit last year said mismanagement had led to steep losses in the plan.

The health plan is overseen by lawmakers and a board of directors, but consultants told a legislative task force that the plan should be set up as an independent agency within the Governor's Office and that the existing board should be replaced.

"Bring the appropriate level of accountability and transparency to the process, and to the extent possible, take out some of the politics that may play a role if it's in the legislative branch," consultant Cynthia Knippling said.

Jack Walker, the health plan's executive director, said he had no objection to restructuring the plan within the Governor's Office. But he bristled at Knippling's contention that the plan lacks oversight.

"It's all falling under one person, and it depends on the skills and abilities of that person," she told the task force, referring to Walker.

"I would respectfully challenge that," he responded.

Consultant: State Health Plan needs overhaul Consultant: State Health Plan needs overhaul

The consultants also recommended reworking contracts with Blue Cross Blue Shield of North Carolina and Medco Health Solutions, which administer medical and pharmacy benefits, respectively, for the plan. Changing how Blue Cross is paid for its services and using more generic drugs and mail-order prescription services would save money, they said.

Blue Cross officials said they have modified their contract to reduce what they charge to the state.

The consultant said some of the same concerns were first brought up in 1994, but lawmakers never remedied the situation.

"If you see a car going over a cliff, you don't take 16 years to study it. You take action," said Erica Baldwin, spokeswoman for the State Employees Association of North Carolina.

Members of the task force said they expect to propose new legislation to fix the health plan in the 2011 legislative session.

"Certainly, all options are on the table," House Majority Leader Hugh Holliman said.

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  • myperspective Aug 16, 2010

    My spouse (continued) ...recently lost insurance coverage with a private employer which was costing $200 per month. My cost as a state employee to add my family is almost $600 per month. And for that increase I get to pay higher co-pays for doctor visits and prescriptions - and higher deductibles - than with his private employer. The general public mistakenly thinks state workers have it made. I only left private industry a few years ago and can firmly say that is a misconception."

  • myperspective Aug 16, 2010

    "One possible solution to alleviating the shortfall would be to have state employees and lawmakers contribute to the cost of their health care programs like their private sector counterparts do. The glaring disparity between the effects of our economic downturn on the private sector (read:producers) and the public sector (read: users) is almost certain to spur more such reform. How can the public sector continue to add workers while the private sector workers face layoffs and unemployment? Over the last two years, raises and bonuses have been non-existent for workers, while government employees continue to advance as though their jobs exist in a bubble. The key to getting our economy on the road to recovery is to wean the government from its sense of entitlement."

    Your information, like much of the public perception, is not accurate. I am a state employee. I have not had a raise in several years and in fact state employees had a pay cut in the form of furloughs in 2009. My spouse

  • james27613 Aug 13, 2010

    mpheels is right, State Employees' have been getting less and less each year.

    No more 401k matching money, (my p/t job matches so I bumped up that contribution), 2% wage increase and no increase 2010 or 2011.

    State becomes a training center for new hires, they stay a year or two and get all the training that they can get.
    They bail out and get jobs in private sector.

    We rehire new and the cycle continues.

  • james27613 Aug 13, 2010

    many companies in private sector give you 'flex' dollars to buy the options on the health play you need and the more people in your family the more dollars you get.

    Not the case for the SHP of NC.

  • james27613 Aug 13, 2010

    The SHP contracted with SECOVA to audit our dependents.
    We have to fax, mail or upload to SECOVA page #1 of IRS 1040 and the last page with both employee and spouse signatures.
    All of the financial info can be blocked out with marker.

    The PO Box and fax may be in RedBank NJ but SECOVA is based in
    INDIA.

    More jobs sent out of the country to INDIA.

    Anyone can print a 1040 tax form and fill out with any data they wish to fill in the blanks with.

  • doustoi Aug 13, 2010

    One possible solution to alleviating the shortfall would be to have state employees and lawmakers contribute to the cost of their health care programs like their private sector counterparts do. The glaring disparity between the effects of our economic downturn on the private sector (read:producers) and the public sector (read: users) is almost certain to spur more such reform. How can the public sector continue to add workers while the private sector workers face layoffs and unemployment? Over the last two years, raises and bonuses have been non-existent for workers, while government employees continue to advance as though their jobs exist in a bubble. The key to getting our economy on the road to recovery is to wean the government from its sense of entitlement.

  • FromClayton Aug 13, 2010

    *sigh* this is going to cost me a lot of money

  • dogluvr26 Aug 13, 2010

    Considering the fact that BCBSNC revealed yesterday that they are outsourcing a huge portion of work to the Phillippines, I think the State needs to look at a completely different company to deal with anyway--particularly one that keeps jobs in the state.

  • indrdw Aug 13, 2010

    apex man. Who in the world can pay so much out of pocket expense and still pay for an exorbitant insurance premium! That is why a lot of people drop the insurance. The government put us in debt for bilions of dollars and did not address the problem now we will pay more, that is those of us who are responsible enough to care to start with. Those who have nothing, do not care to have anything and never will get all the healthcare they want. They walk away and the other of us are told they are the reason for high costs. It is all about greed in the end.

  • Apex Man Aug 13, 2010

    The problem with healthcare is that coverage starts with little out of pocket expenses and the insured believe that everything should be covered from dollar one.

    Insurance is designed to pay for the things you can not pay for by yourself like an operation or long term medical problems, but many abuse this by trying to get every medical procedure and medicine that they believe they are entitled to.

    Many complain that the premiums they pay exceeded the medical expenses for the year, but do not take into consideration that there may be a time that they need an operation or have an emergency that could use many years worth of premiums.

    The only way to reduce premiums is to require prior authorizations on more expensive procedures / tests when a less expensive alternative is available. Instead of having $50 pharmacy co-pays maybe there should be a $50 MRI co-pay.

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