NC treasurer hopes to cut family health premiums for state employees as contract shifts

North Carolina State Health Plan officials are researching the differences between the provider networks for Aetna and Blue Cross and Blue Shield of North Carolina as they prepare for a shift in management of the health insurance plan.

State Treasurer Dale Folwell, whose office oversees the plan, said Tuesday he expects to meet with Aetna’s senior management in the next few weeks to discuss “timetables and deliverables” as the company takes over from BCBSNC in 2025. Folwell said he expects administration costs to go down as the plan moves to a new third-party administrator for the first time in 40 years.

Folwell also told reporters during a monthly conference call that benefits decisions will continue to be made by the self-insured state health plan and its board of trustees, not the outside administrator that manages day-to-day operations. He said he expects to continue a freeze on family premiums “for the next year or so,” after which he hopes to reduce them.

State employees have long complained about the premiums they pay to add dependents to their health insurance plans. Folwell said he’s hoping lower premiums will attract younger, healthier people to the plan, lowering overall costs as the pool of more than 700,000 people covered increases.

You can’t have an insurance plan made up mostly of older, sicker people, Folwell said, any more than you can have “a car insurance company with all bad drivers.”

“We have to lower, not just freeze,” Folwell said. “We have to lower family premiums.”

The change in third-party administrators is one part of Folwell’s effort on the health plan, and it’s not a done deal. The plan’s board of trustees voted last month to replace BCBSNC , which has had this multibillion-dollar contract for decades, with Aetna. BCBSNC has said it plans to appeal the decision.

That process could drag on for months, if not years, and end up being decided by the courts. BCBSNC said last week that it will file a public records request to delve into the contracting process and “ensure the best outcome for North Carolina and all State Health Plan members.”

Folwell said last week that the new contract could save the plan $140 million, and that he’d be “working closely with Aetna to create new ways to provide price transparency.” Transparency is something he’s feuded over with BCBSNC for years, seeking more information on deals the company struck on the plan’s behalf with hospitals and medical groups.

Plan auditors can’t read those contracts and verify that employees are “receiving the proper contractual discounts,” Folwell said.

“We want to end that,” he said.

But the treasurer struggled to explain Tuesday exactly how Aetna would differ from BlueCross on this point. Given BCBSNC’s promised appeal, “there’s not a lot I can say,” he said.

When pressed, Folwell said he was “optimistic with Aetna that we are going to be partnering with somebody who has a more aligned interest with us regarding the transparency of healthcare.”

A BCBSNC spokesperson acknowledged that some contract details are confidential but said in a statement that the state health plan can bring in an independent auditor to review confidential details and verify that rates are applied correctly. The last audit such audit was performed in 2016, she said in a statement.

Transparency and cost may not have been the only reasons for the contract switch. Some plan trustees complained over the past year about software problems that caused payment delays, Business North Carolina reported Monday.

The board discussed these issues as the decision was made last year to rebid the third-party administrator contract, Business NC reported.

BCBSNC said in its statement that it's not unusual for issues to arise when transitioning large data sets.

"Blue Cross NC has worked closely and transparently with State Health Plan leadership to address these operational challenges, while providing the support that teachers, state employees and taxpayers expect and deserve," spokeswoman Sara Lang said.