Unanimous NC Senate backs UNC Health changes, despite 'monopolistic' concerns

The UNC Health bill also says new hires won't be part of the state retirement system, and it would let the system shift all employees onto a new health plan.
Posted 2023-05-02T00:50:50+00:00 - Updated 2023-05-02T21:15:13+00:00

The North Carolina Senate voted Monday to give UNC Health a new immunity from federal antitrust laws, which would aid in mergers and purchases as the system expands.

Senate Bill 743 also says employees hired by the state-owned nonprofit medical system on or after Nov. 1 won’t be part of the state retirement plan, with UNC Health developing a new benefits plan instead. Current employees can stay in the Teachers’ and State Employees’ Retirement System, but they’ll also have a one-time opportunity to move into the new system, according to the bill.

The measure may also authorize UNC Health to move all its employees off the State Health Plan and into a new health insurance plan. An actuarial note on the bill says it does, but UNC Health itself disagrees. After this article was published, UNC Health spokesman Alan Wolf said current employees would have to volunteer to change plans.

The bill passed the Senate unanimously and moves to the House of Representatives for more discussion. There was almost no debate Monday, despite opposition from State Treasurer Dale Folwell and the State Employees Association of North Carolina, which represents some 55,000 people.

SEANC Executive Director Ardis Watkins said the bill would increase costs for state employees remaining on the State Health Plan, which in turn will make it harder to recruit and retain state employees.

“This is literally the opposite of the fiscally prudent thing to do,” Watkins said in a statement. “It will cost an estimated $1 billion in liability placed on the plan for correctional officers, teachers and other state employees, for the benefit of the university system.

Folwell, a Republican elected statewide, opposes the bill for multiple reasons. His office oversees both the State Health Plan and the retirement plan. He, too, said losing UNC Health employees would raise costs for agencies.

“They’re leaving behind a billion-dollar hole,” said Sam Watts, Folwell’s lobbyist at the General Assembly.

Folwell also opposes the antitrust language. He said this part of the bill would help UNC Health “expand their monopolistic footprint,” leading to “lower quality, lower access and higher-cost health care.”

Senate Democratic Leader Dan Blue expressed some apprehension along these lines, but he voted for the bill.

“I just have some concerns because the antitrust laws over the last 20 years have basically kept some systems from getting together and basically monopolizing health care,” said Blue, D-Wake. “Not that UNC would do that. I just want us to be cautious.”

Sen. Ralph Hise, the bill’s sponsor, said the UNC Board of Governors and the General Assembly itself would keep oversight on the system. The bill names UNC Health an agent of the state, which is why the system would be exempt from antitrust laws. Hise, R-Mitchell, said that would enable UNC Health to discuss prices and other sensitive information with other hospitals, allowing it to partner with struggling facilities without running afoul of laws that limit discussion of competitive information.

Hise said he wants UNC Health to be able to partner with, and potentially save, financially troubled rural hospitals instead of having to wait until a local hospital closes to step in and buy it.

“This would let us transition that much earlier,” Hise told WRAL News last week.

Hise also said the bill would let UNC Health “go into full partnerships with ECU [Health] and with Duke [Health] and with other facilities … without having to deal with antitrust issues.”

“The feds would interpret UNC involved in negotiations as negotiations with the state, which are exempt,” he said.

Wolf, the UNC Health spokesman, said the system has “no plans to merge or buy anyone.” The system wants the bill in order “to continue fulfilling its mission as the state’s health system, especially in terms of serving rural areas,” Wolf said in a statement.

“The statute needs to be modernized to ensure that UNC Health has the ability to adapt to today’s rapidly evolving health-care world,” Wolf said. He said the statute hasn't been updated in 25 years.

Wolf also said UNC Health has “no plans at present to adjust our benefits plans” for employees but recognizes it’s in “a highly competitive health industry.” The bill will “give us flexibility to offer new employees the most competitive benefit options,” he said.