Local Politics

Ex-health plan director disputes state audit

Posted May 8, 2009 5:59 p.m. EDT
Updated May 8, 2009 7:16 p.m. EDT

— George Stokes, a former director of the health plan for state workers, said he has become the fall guy for the plan's financial troubles.

Projections of a $57.9 million surplus at the end of the 2008 fiscal year last June quickly morphed into a $79.7 million deficit because claims and administrative expenses were underestimated, according to a recent state audit.

The shortfall continued to balloon in recent months, resulting in a $250 million taxpayer-funded bailout. The bailout also calls for higher deductibles and co-payments for members, an 8.9 percent increase on premiums for dependent coverage and cuts in benefits for people who smoke or are obese.

The State Health Plan provides medical insurance for almost 650,000 state workers, public school teachers and retirees. It also administers N.C. Health Choice, which covers 122,000 uninsured children statewide.

The audit accused Stokes of covering up the growing deficit for several months before lawmakers fired him last July.

"I do think it's a red herring," Stokes said Friday, referring to the allegations leveled against him. "To meet their ends, that's what they do."

He maintained fiscal researchers in the General Assembly were given monthly updates, and he said he believes he took the fall so legislative leaders like Senate Majority Leader Tony Rand wouldn't have to accept responsibility for the plan's sinking finances.

"Our staff was coming to us saying they couldn't get the information," Rand said Friday. "I know the plan was mismanaged, and he was asked to leave."

Stokes disagreed with the contention that the State Health Plan was in critical condition.

"We didn't see the crisis," he said of his staff. "There's nothing to hide."

The only point he and Rand agree on is that the plan should be overseen by an executive branch agency and not state lawmakers.

The state audit also criticized the state's contract with Blue Cross Blue Shield of North Carolina, saying the structure provided no incentive for the insurer to cut costs and made it difficult to forecast administrative expenses.

Stokes agreed that the contract had high costs and said bringing in competing vendors would have saved money.

"I would have moved on to say, 'You need to get other people in here,' and that in itself would help make Blue Cross more competitive," he said.

Stokes also questioned the motives of health plan lawyer Chris Evans, who also worked for Rand. He said she helped negotiate the Blue Cross contract and then went to work for the insurer.

"The fact that she went over there two months after I was let go, clearly, it doesn't pass the smell test," he said.

Blue Cross spokesman Lew Borman said Evans wasn't involved in financial negotiations of the contract and now has no dealings with the State Health Plan as a Blue Cross employee.