NC Health Care Recommendations: State Health Plan

On April 11, 2006, the North Carolina House Select Committee on Health Care released recommendations for the 2006 legislative short session. Many of them will be controversial, and taken together they have the potential to significantly change the way that North Carolinians access health care and insurance (and how much we pay). Some of these topics are pretty technical, but no less important for their difficulty. I'm hoping that these posts will begin a conversation on the best course for North Carolina's efforts at healthcare reform.

I'll publish the recommendations of the six subcommittees in six posts, along with some of the background information from each report. The subcommittees are:

1. State Health Plan Overview

North Carolina operates a huge insurance program in the Teachers' and State Employees Comprehensive Health Plan. As in other insurance sectors, the aging of the baby boom is taking its toll. ("The Plan's current demographics are weighted toward members requiring greater utilization of medical care. Data from the Plan indicates that the costliest age groups under the Plan are growing fastest in terms of enrollment growth and claims costs.")

Last year the program forecasted a nearly half-billion dollar shortfall over the 2005-2007 cycle. The General Assembly filled this hole by raising premiums rates and reducing plan member benefits. Understandably, the young and healthy ("good risk") are leaving the plan making its overall operation more costly.

The Plan's administrator, George C. Stokes, intends to offer a three-option preferred provider option (PPO) to Plan members starting this fall. Generally, PPOs steer patients toward a set of "in plan" doctors and facilities by offering lower premiums and co-pays when patients use the preferred resources.

2. Integrated health Management Initiative

Someone figured out that keeping people healthy is cheaper than fixing them when they're sick. "The initiative is designed to empower plan members to stay healthy and to help those with chronic disease or disease risk factors better manage their health care."

3. Stakeholder Groups

The Subcommittee solicited testimony from the following groups: the NC Association of Educators (NCAE); the State Employees' Association of North Carolina (SEANC); the Retired Government Employees' Association (RGEA). Each offered suggestions; the general theme was more (or at least not decreased) coverage at lower (or at least not increased) cost.

The Subcommittee offered the following recommendation:

The Subcommittee on the State Health Plan recommends that the House of Representatives, through the committee process during the reconvened session of the General Assembly, review the State's policy of allowing current employees who retire with a minimum of 5 years of contributory retirement service to be eligible for non-contributory health benefit coverage by the State. The Subcommittee recommends that the appropriate standing committee of the House review the option of changing eligibility for non-contributory health benefit coverage as a retired employee, for those future employees first hired on or after October 1, 2006, to a schedule that requires a retired employee participating in a State sponsored health benefit plan to be eligible for a State contribution toward the premium required for health benefit coverage on the following schedule:

Years of Service,
Contributory Retirement Service
Percent State
Contribution To Premium
Percent Employee
Contribution to Premium
5 up to 10 years 0% 100%
10 up to 20 years 50% 50%
20 years+ 100% 0%

The Subcommittee requests that the standing committee review of this potential policy change include the actuarial analysis of bills currently proposing a similar policy change and also any available information on the potential financial effect changing this policy may have on the reporting of liabilities associated with the cost of retired employee health benefits as specified in coming Governmental Accounting Standards Boards guidelines.

4. Private Sector Approaches

The Subcommittee solicited input from three successful North Carolina companies (BB&T, SAS Institute, and Capitol Broadcasting) regarding how they manage their employees' health benefit plans. This section of the report is interesting reading and will form the centerpiece of a later post, but no recommendations came out of this testimony and it doesn't shed much light on the State Health System, so I'll say only a few words here. All three companies talked about having worked wellness programs into their health care systems over the years. SAS pointed out the indirect benefit of providing wellness and primary care in the workplace: reduced absenteeism and increased productivity.

5. Health Savings Accounts and Health Reimbursement Accounts

The Subcommittee heard from Aon Consulting about Health Savings Accounts. The information presented was the same kind of generalized information that can be found on a number of websites.

6. UNC-System Comments

This section, too, is only informational. UNC employees aren't very happy with the State Health Plan, and recently proposed legislation to free the university system from participation in the plan. UNC is no longer pushing that agenda; they're waiting for the State Health Plan to improve.