The North Carolina State Health Plan is an annual $3.3 billion budgetary behemoth servicing 727,000 state employees and retirees.
More than that, however, according to State Treasurer Dale Folwell (R):
Taxpayers spend more than $3.3 billion a year on the plan — more than the state spends on the entire university system or on public safety.
Health care costs, on average, have increased 7 percent to 9 percent a year while the state’s budget provides only a 4 percent annual increase. At current expenditure rates the plan will run out of money in 2023.
In addition, the plan’s unfunded liability for retiree health care is $32 billion — right behind Illinois. The path we are on is unsustainable.
Folwell has been working on a proposal to bring the State Health Plan under some fiscal restraint by implementing a reference-based pricing model tied to federal Medicare reimbursement rates. This model would bring needed pricing transparency to the State Health Plan and allow state lawmakers to implement policies to bring costs further under control. After all, the first step in controlling the cost of something is to know the price in the first place.
However, on February 6, state Representative Josh Dobson (R-McDowell) filed House Bill 184 – Study State Health Plan Design. Though it is innocently named, the bill contains two sections. The first section does require a legislative study of the State Health Plan.
Section 2, however, is not a study at all, but a hard-nosed policy change away from Folwell’s plan. Section 2 reads:
For the period of January 1, 2019, through December 31, 2021, the State Treasurer, the State Health Plan for Teachers and State Employees (State Health Plan), the Board of Trustees of the State Health Plan, and the Executive Administrator of the State Health Plan shall continue to utilize the Blue Cross Blue Shield of North Carolina Blue Options provider network and to reimburse participating network providers in accordance with one hundred percent (100%) of the applicable fee schedule. Further, the State Health Plan, the Board of Trustees of the State Health Plan, and the Executive Administrator of the State Health Plan shall not implement or utilize any reference-based pricing model to reimburse providers during the period specified by this section. This section shall not apply to any Medicare advantage plans or plans described in G.S. 135-48.40(e) offered by the State Health Plan.
In other words, if a legislator unknowingly voted for House Bill 184, assuming they were voting for a long-needed study of the State Health Plan, they would also vote for stopping Folwell’s plan to rein in the long-term costs of the very thing they want to study.
Why would legislators – particularly Republican legislators – file legislation to stop a plan that would “save $300 million for the Plan and another $66 million for teachers, state troopers and other state and local public servants”?
Hint: It’s related to campaign contributions and a new advocacy group called Partners for Innovation in Health Care.
Stay tuned for Part 2…