Local News

State Health Plan Changes Receive Final Legislative Approval

Posted June 29, 2001

— State employees and retirees will see their out-of-pocket costs go up beginning next month as the General Assembly agreed Thursday to changes in their health insurance plan.

The bill, which now goes to Gov. Mike Easley for his signature, will increase deductibles that must be paid by more than 500,000 plan participants before insurance begins to take over. Co-payments for brand-name prescriptions also will increase.

The new benefit scheme was agreed to on the last day the Legislature met before the new fiscal year. Lawmakers pulled their plan provisions out of their respective budgets and into separate bills so they could begin seeing cost savings of $95.7 million starting Monday.

The higher out-of-pocket costs are part of a larger overhaul of the plan to reduce a projected $382 million gap that needs to be bridged to keep the insurance plan solvent.

Other adjustments not in Thursday's bill likely will include a 30 percent increase in employee premiums come Oct. 1 and a $150 million cash infusion from the Senate. Reductions in hospital and doctors reimbursements also are ahead.

Senate Majority Leader Tony Rand said he hopes the changes will rein in the skyrocketing costs related to the health plan, which serves state employees, teachers retirees and their dependents.

"I'm glad it wasn't $350 million and a 50 percent increase in premiums," said Rand, D-Cumberland. "I think we did all we could to protect family against catastrophic situations."

Rand and plan officials said it was vital to get the out-of-pocket changes approved this week. If the health plan had been approved in July, officials said the changes likely couldn't start until Aug. 1. That would have meant $8 million in lost savings.

On the House floor, some lawmakers seemed resigned to the changes without having them go through a close examination.

"I guess we've got to vote on this bill so we don't go broke in a day or two," said Rep. Martin Nesbitt, D-Buncombe.

The final plan held to many of the House provisions, including raising the annual deductible that must be paid by an individual to $350, from the current $250. The Senate plan sought $400. For a family, the deductible would increase from the current $750 to the House's recommendation of $1,050.

After the deductible is met, the health plan pays 80 percent of the bills until a patient reaches an out-of-pocket maximum, now going up from $1,000 to $1,500 in a year. The health plan then pays 100 percent of remaining expenses.

Co-payments for branded drug prescriptions would increase from $15 to $25 and from $20 to $35 for branded drugs that have generic equivalents. Prices for generic equivalents did not change. Patients also would see higher or new co-payments for emergency room and home-health visits and hospital rooms.

The bill also will give the plan's executive administrator the power to increase deductibles annually based on a price index of medical expenses compared to the previous year. Deductibles, co-payments and out-of-pocket maximums haven't changed since then.

Nesbitt said the state is now reaping what was sown in the 1990s, but added he didn't like the index.

Now "we're putting this thing on automatic pilot," he said. "I don't like that."

The final version didn't include a Senate provision that would have made it easier for five administration positions within the health plan to be hired and fired more easily. The positions would have been exempt from state personnel rules that provide an employee with more rights related to termination proceedings.

Plan executive administrator Jack Walker asked for the exemptions. When asked why he sought them, he replied Wednesday: "I need a team."

Rand said Thursday that some of Walker's employees are making it difficult for Walker to do the job he was hired to do.

"It's a very tough situation," Rand said. He said the exemptions weren't in the final bill because House negotiators wouldn't agree to them.

Walker didn't return a phone message left at his office Thursday evening.


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