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State Health Plan Changes Receive Final Legislative Approval

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RALEIGH — State employees and retirees will see theirout-of-pocket costs go up beginning next month as the GeneralAssembly 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 500,000plan participants before insurance begins to take over. Co-paymentsfor brand-name prescriptions also will increase.

The new benefit scheme was agreed to on the last day theLegislature met before the new fiscal year. Lawmakers pulled theirplan provisions out of their respective budgets and into separatebills so they could begin seeing cost savings of $95.7 millionstarting Monday.

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

Other adjustments not in Thursday's bill likely will include a30 percent increase in employee premiums come Oct. 1 and a $150million cash infusion from the Senate. Reductions in hospital anddoctors reimbursements also are ahead.

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

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

Rand and plan officials said it was vital to get theout-of-pocket changes approved this week. If the health plan hadbeen approved in July, officials said the changes likely couldn'tstart until Aug. 1. That would have meant $8 million in lostsavings.

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

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

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

After the deductible is met, the health plan pays 80 percent ofthe bills until a patient reaches an out-of-pocket maximum, nowgoing up from $1,000 to $1,500 in a year. The health plan then pays100 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 genericequivalents. Prices for generic equivalents did not change.Patients also would see higher or new co-payments for emergencyroom and home-health visits and hospital rooms.

The bill also will give the plan's executive administrator thepower to increase deductibles annually based on a price index ofmedical 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 the1990s, 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 wouldhave made it easier for five administration positions within thehealth plan to be hired and fired more easily. The positions wouldhave been exempt from state personnel rules that provide anemployee with more rights related to termination proceedings.

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

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

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

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

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