Raleigh, N.C. — 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.
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.
"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.
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.