@NCCapitol

Worker premiums, new oversight approved for State Health Plan

Posted March 24, 2011

— The state Senate has tentatively approved sweeping changes to the State Health Plan.

The plan, which serves about 667,000 state employees, teachers and retirees, has faced a series of ballooning revenue shortfalls over the past few years. In 2008, lawmakers had to patch a $250 million gap. This year, it was $515 million.

Senate Bill 265 would close that shortfall by cutting benefits to enrollees, raising deductibles and copayments by about 17 percent on average, and – for the first time – charging employees and teachers a monthly premium for their coverage.

Under North Carolina’s current plan, although enrollees pay the full premium for spouses and dependents, they don’t pay any premium for their own coverage. Most other states do charge premiums, but state workers and teachers in North Carolina have fought the proposal for years, saying it would open the door for the state to shift more and more costs to employees.

If Senate Bill 265 passes, state workers would pay around $11 a month for the lowest level of coverage or around $22 a month for a better plan. That would raise about $384 million to cover the gap. The state would add about $10 million in revenue, and the balance of the deficit would be covered by cuts to benefits.

Sen. Tom Apodaca, R-Henderson, said the changes would upset a lot of people. “We do not want to charge a premium,” Apodaca said, “but we’re going to have to.”

Senate Democrats argued the premium amounts to a pay cut for state employees, who haven’t received a cost-of-living salary increase in nearly four years.

“I think it’s a bad deal for state workers,” said Sen. Doug Berger, D-Franklin. “It sends the wrong message.”

But Apodaca noted that the state pays about $500 per month per employee. The premium would be less than 5 percent of that. “We could never receive this kind of coverage for this premium in the private market,” he said.

Retirees would be allowed to keep the lowest level of coverage for free, but for the better plan, they too would have to pay a premium. Medicare would cover a few dollars of it for those who are eligible, but Democrats argued the state should cover it all.

“Our retirees are folks who have given their lives to this state, and the whole time they were doing that, they expected retirement benefits,” said Sen. Martin Nesbitt, D-Buncombe. “We also promised them health insurance. And now they’re going to have to start paying for it. And the price is going to go up.”

“I think this plan is tough for all of us,” responded Sen. Harry Brown, R-Onslow. “I don’t think there’s a soul in here that wanted to do that. But it’s just part of what’s going on with health care costs. This is a small premium to ask them to pay at this time to help us get over the hump. I can promise that, if you’re in the private sector, it’s a whole, whole lot more.”

The measure would also change the health plan’s governance. It’s currently under the oversight of the legislature. The bill would move it into the Office of the State Treasurer, who would manage it with the help of a committee appointed by lawmakers and the governor.

It also would open the health plan’s contracts with providers to public inspection. Both have been points of contention for state employees, who say the changes will takes the politics out of the health care plan.

Senate Bill 265 would also remove two controversial “wellness” provisions that raised premiums for smokers and overweight people. The goal was to give members an incentive to change their behavior, but Apodaca said he heard more complaints about those provisions than anything else in the State Health Plan. “It infringed on their rights. It’s a matter of fairness.”

The Senate will take a final vote on the measure Monday night. It’s expected to pass and move on to the House.

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  • lesliek01 Mar 29, 11:59 a.m.

    I don't mind paying for my insurance so bring back the 90/10 plan and let me decide what I want to pay for.

  • Unite_Or_Die Mar 25, 7:19 p.m.

    All this talk about competition reducing prices is pretty irrelevant given the fact the the State of NC insures itself and that BCBS is paid a sweet premium just to manage the paperwork. But I do have to acknowledge that you would think with the number of individuals in the SHP that there would be a definite advantage in negotiating better prices for coverage by opening up the contract to have other companies that provide coverage. After all, if its' such a great idea to outsource services that have traditionally been done by the State then why does it not occur to the Legislature or the Governor to open up the SHP to outside insurers. I'll tell you why. It's because they would rather control the money coming in for premiums paid by State workers than to go through a competitive bidding process to have a selection of different insurers to choose from. All I can say is that if I wasn't so close to retirement, I would leave State government tomorrow and not even look back.

  • blackdog Mar 25, 6:58 p.m.

    It is looking like the goal of the GOP is plutocracy.

  • emerald7575 Mar 25, 5:57 p.m.

    I have an idea im a State worker, just go ahead and take 1/2 my pay check, you are heading that way any how, maybe you be happy then!!!!!

  • Plenty Coups Mar 25, 4:04 p.m.

    "The numbers you are spouting are lawsuits - ITS THE MALPRACTICE INSUARANCE!!"

    What part of the total cost of health care do you not understand? The amount of insurance a doctor pays gets passed on to the consumer and then gets factored into the total cost analysis. A cap on malpractice awards won't lessen the costs anyway without a change in malpractice liability. You're acting like this will save health care. Consider that over 30 states now have caps on malpractice awards yet there haven't been significant savings. Even the insurance industry itself admits that its not a major factor in rising prices.
    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=az9qxQZNmf0o

    http://www.wellpoint.com/pdf/Premium%20Cost%20Drivers.pdf

  • WooHoo2You Mar 25, 3:14 p.m.

    "What about cell phones??? "

    Great example. Under regulations, the company owned my number. ONce this was deregulated, I was allowed to port my number to a new carrier. Prices dropped.-Keepin_it_real_in_NC

    Uh, no. Regulations were ADDED to make cell phone companies release your number. They would hold your number in an attempt to keep you as a customer.

    You really do make up everything you post on the fly...

  • Keepin_it_real_in_NC Mar 25, 2:53 p.m.

    "What about cell phones??? "

    Great example. Under regulations, the company owned my number. ONce this was deregulated, I was allowed to port my number to a new carrier. Prices dropped.

  • blackdog Mar 25, 2:48 p.m.

    Also from the Robert Johnson Wood Foundation :

    " Malpractice premiums vary, in part, on the performance of investments made by insurance companies. When investment returns were higher for stocks in the Dow Jones Industrial Average, growth in malpractice insurance premiums was reduced."

  • WooHoo2You Mar 25, 2:20 p.m.

    johnnyplusthree,

    -blackdog - do even know what you are talking about? look at industries that have true competition ones that do not.

    I guess you have not seen the price of bottled water? 1.50 cents for 16.9 oz of the most common item on the planet and EVERYONE ‘makes’ it.

    -Do you not rememeber 2-3 years ago pay $10,000 and more for laser surgery?/ How much now?? $2000 or less and better qualtity.

    Do you mean when the technology was new?

    -What about cell phones??? 10 years ago hundreds a month and big bulky phones.

    Do you mean when the technology was new?

    Those are two REALLY bad examples.

    -You obviously do not have a clue how competition works. Go learn about competition so you won't look like a dufus next time!

    I think you may want to look at the difference between ‘competition’ and technological advances. Flat screens did not cost 10K because of competition but due to their cost of production.

  • blackdog Mar 25, 2:16 p.m.

    Johnny+3, your comprehension of what I've stated is lost. Competition is great. Go for it. Just don't allow large companies to absorb, the smaller companies.

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