State Health Plan board could remove option popular with workers

Posted February 1, 2016

N.C. health, mental health, Medicaid generic

— State employees could lose access to a popular health insurance option and see costs for other options rise under changes the North Carolina State Health Plan board of trustees is due to vote on Friday.

Executives who run the health plan, which covers state workers, teachers and retirees, have also recommended that the board consider eliminating coverage for spouses, likely sending most of them to shop for coverage on Affordable Care Act exchanges.

Although those changes, including the elimination of what's known as the 80/20 plan, wouldn't take effect next year, board members could vote Friday to have their staff work on putting those changes in place by 2018. Plans for 2017 appear to raise costs across all coverage options, including what could be the last year of the 80/20 offering.

"In the 2015 Budget, the General Assembly required the Board to reduce cost growth to the state contribution for the 2017-19 fiscal biennium while maintaining significant cash reserves," Brad Young, press secretary for the Office of State Treasurer, wrote in an email Monday.

The changes under consideration, he said, were proposed in response to that legislative mandate.

Health plan changes presentation cover State Health Plan Changes Presentation State Treasurer Janet Cowell, a Democrat, chairs the plan's board of trustees, and her office provides an administrative home for the plan. Her office did not make any of the executives who put the recommendations to the plan's board available for an interview.

However, Dr. Warren Newton, a board member, said that the state health plan is responding to pressure from the legislature, which has demanded hundreds of millions of dollars in savings.

"We understand that this is really difficult and we've got a series of unpalatable choices," Newton said. That said, he added, the alternative would be "huge increases in premiums."

Newton said he was uncertain whether the state board would make a final decision on their long-term approach Friday. Others are urging them to take a different course than what they considered last week.

"The worst"

​"These proposals are going to make the State Health Plan the worst state health plan in the United States of America," said Chuck Stone, director of operations for the State Employees Association of North Carolina, the largest union-affiliated group representing state workers, speaking in a video posted late last week.

Health plan board members first discussed the potential changes for 2017 and beyond last week.

There are roughly 691,000 employees and retirees in the State Health Plan. Of those, 279,655 – or about 40 percent of members in the plan – participate in what's known as the 80/20 plan, in which members pay 20 percent of the cost of their health care up to a certain deductible. That deductible changes based on how many family members, if any, are covered under the plan.

According to documents given to board members last week, starting in 2018, the 80/20 plan would no longer be available, if the trustees follow the health plan staff's recommendations. The same documents indicate the plan may need permission from lawmakers before excluding spouses from the health plan.

Stone said that there would be more individuals enrolled in the 80/20 plan if it were an option for certain categories of retirees who are also eligible for Medicare. Those older retirees are all enrolled in the 70/30 plan, although that is the subject of litigation.

State Health Plan breakdown

Changes under consideration would also add premiums and raise the deductibles paid by those who enroll in the remaining plans. One of those is a "consumer-directed" plan with high deductibles paired with a health savings account. For many state workers, particularly those who earn lower salaries, that plan isn't affordable, said Ardis Watkins, the lead lobbyist for SEANC.

"If you can't afford to shell out a lot of upfront cost, it's like not having insurance at all," Watkins said.

Local lawmakers said they are just beginning to hear from constituents about the potential changes.

"I've heard about it, and I've requested a meeting to discuss it in detail," said Rep. Marilyn Avila, R-Wake.

Reps. Grier Martin, D-Wake, and Duane Hall, D-Wake, said they were taken unawares by the potential changes.

"Ultimately, I think this was the legislature's fault," Hall said, noting it was lawmakers that pushed the plan to find cost savings. "I think it's just another way to cost shift onto the working class. Not only are we doing that, but we found a sneaky way to make them (the health plan) the hatchet men."

Hall said he and other lawmakers were getting "lots" of phone calls. And he said the plan should not make a final decision on Friday.

Rep. Nelson Dollar, R-Wake, a key budget writer, acknowledged that lawmakers had called on the health plan to find savings. But, he said, it was natural for employees to be worreid.

"For a number of people, they would actually fair better under that consumer-driven plan," Dollar said. So far, only 5 percent of state employees have taken advantage of the relatively new option and Dollar said it's obvious many are simply uncomfortable with it. "They want to be cautious, and I appreciate that," Dollar said of employees, adding that the health plan "had more work to do" to convince subscribers.

It was unclear Monday whether the health plan could take some of the steps without legislative approval. Young said that the plan could make most changes without new law, but that elimination of spousal coverage would require legislative approval.

"The Board looks forward to working with the General Assembly on a solution that will maintain the financial stability of the State Health Plan while providing meaningful benefits to teachers and state employees," Young said.

Watkins said that, if the health plan wants to look for savings, its own consultants have pointed toward potential changes that would net at least $250 million per year. The state, she said, should bring the rates paid to providers more in line with rates paid by Medicare. That would mean less profit for doctors and hospitals, something that would be likely to spur push-back by medical providers. Passing on the costs to state employees, she said, may be the politically easier option.


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  • amycarol0313 Feb 3, 2016

    Are they trying to run people away from education? Pay sucks, benefits are not the best in the world and the one positive they are now trying to take away! Only thing I have to say is I only have a few more years and I'm done with this political chess match! I never thought that education would be a political nightmare! If there are no teachers, who is going to teach the future of North Carolina? I can guarantee those overpaid legislators are not going to come off their pedestal to being so underpaid and disrespected!

  • Rebecca Caldwell Feb 3, 2016
    user avatar

    How many states attack their own people the way NC does? I cannot stand the Republicans controlling North Carolina. Freakin' pieces of trash who erode education and constitutionally protected rights, and consistently attack the lower and middle classes.... A heart-felt THANK YOU to every backwoods idjit who voted for them because they waved bibles and guns in your face. Did you really believe they represented you?

  • Carl Keehn Feb 3, 2016
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    Reading the proposal, the State is tap dancing around the elephant in the room. Their argument for spousal coverage indicates that:

    Employees and retirees pay full premium cost for dependents, but the
    State’s contribution does provide an indirect subsidy

    In other words, the state is paying no more to cover a family than it is for the individual, the entire additional cost is borne by the employee. The removal of spousal coverage is at best an attempt by the Legislature to punish State Employees for working for the State.

  • Carl Keehn Feb 3, 2016
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    View quoted thread

    This issue has existed for far longer than the Affordable Care Act. I came to North Carolina in 2007 and at that time was appalled by how poor the health plan offered to State Employees was. The ACA served only to force Blue Cross Blue Shield to bring the plans offered to State Employees into compliance. They also stabilized costs a bit as each year prior to the adoption of the ADA saw large increases in premium costs.

  • Gail Dragon Feb 3, 2016
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    This is terrible, it's bad enough we never get cost of living raises and most of us are paid well under private industry. There is no incentive to stay in state government.

  • William James Feb 2, 2016
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    NC's master plan is to abuse the working man! Low pay, no salary increases, no 401K matching, and SS is supposed to be broke by 2030. In Unionized states they could complain, but SECU isn't a real union, so it lacks any real power or leverage.

  • George Herbert Feb 2, 2016
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    The rate of inflation for health care was higher than the overall inflation rate before the Affordable Care Act passed. It's still higher, but not as high as it was before.

    The state budget writers in the Legislature have been trying to cut health insurance costs for years. It's catching up. The state can't attract new employees who will make a career in state government. New employees come, get some training and burnish their resumes, then leave for private industry. The state ends up wasting money hiring the next batch and training them.

  • Ronnie Reams Feb 2, 2016
    user avatar

    View quoted thread

    It is a self funded plan, State does not buy insurance for workers.

  • Maurice Pentico Jr. Feb 2, 2016
    user avatar

    View quoted thread

    And keep telling yourself its the NCGA's fault for having to keep a budget and purchase insurance from the same open markets as the rest of us.

  • Andrew House Feb 2, 2016
    user avatar

    I really hope that the state does not do this to us, I depend on the 80/20 plans as do some many other state employees of this state.