Worker premiums, new oversight approved for 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.