By Rose Hoban
Additional reporting by Jill Braden Balderas
State Treasurer Janet Cowell has been traveling around North Carolina since January holding meetings to listen to state employees’ and retirees’ concerns about the State Health Plan, the health insurance plan that covers more than 650,000 state employees, retirees and their family members.
Last year, the General Assembly transferred management of the State Health Plan to the office of the State Treasurer, where it had been in the ’80s.
“Problems with the plan had been ongoing for a long time,” Cowell said before a meeting in Charlotte last week. “The problems were part of the irrationality of having 170 legislators trying to design a health plan.”
The move came in the wake of several years of bad news for the plan:
- In 2009, the State Health Plan’s budget came in hundreds of millions of dollars short due to forecasting errors, and had to be bailed out by the legislature.
- In the same year, the Plan started imposing penalties for members who smoked or were overweight. The ‘wellness initiatives’ were later dropped after members complained and the General Assembly acted.
- The Plan kept a tiered premium plan that went along with the wellness initiatives, but, for the first time, state employees choosing the higher tier plan paid part of the premium.
“It is unusual to have a health plan reporting directly into a legislative body and there have been studies done that suggest that there should be an executive branch in control,” said Cowell.
Cowell said she believes moving the plan to her office will depoliticize it. The new structure includes having a 10-member board to govern the plan.
The office of the Treasurer already manages the pension plan for state employees, so it makes sense for the same office to manage the health insurance plan, Cowell argued.
“I already interact with teachers and state employees on the pension side,” she said. “We’ll bring some of that good governance to the state health plan.”
But Cowell said that for many people who have come to the listening sessions, having a face to the plan was the most important change.
“I think people are grateful to be listened to,” she said. “They haven’t had the opportunity to voice their concerns. There was no one sitting there and taking notes. It’s been a recurring theme of people saying, ‘even if there’s no fix to it… i feel good.’ ”
Premiums, prescriptions and copays
According to Cowell, questions about premiums, prescriptions and the high cost of co-pays have been typical among employees and retirees who have attended the meetings. And those were the concerns of Cheryl Fruits, a retired teacher who attended the meeting in Charlotte with about 25 others, mostly retirees.
“If [my premium] went up 5 percent this year, what’s it going to be next year?” she asked “My retirement is not going to increase.”
Fruits also expressed dismay that drugs prescribed by her doctor had been changed by the plan managers.
“I understand now that they [the new board that governs the health plan] just came into being in January, so of course they can’t have things in place,” she said.
Mostly, Fruits was concerned the state keep its promise of free health care for her once she retired.
She and others expressed dismay that many employees and retirees are now being asked to pay a share of their premiums. Retirees opting for the higher tier – or the 80/20 – plan are now being asked to pay about ten dollars a month for themselves, and twenty dollars for dependent coverage.
“That was a promise that we had,” said Judith Brandt, a retired coordinator of psychological services for the Gaston County School District. “They should follow through on what we were told would happen for us if we stayed in the system until retirement.”
At the same time, Brandt expressed concern for the state’s financial woes.
“I understand the economic situation that the state, the nation, individuals are in,” she said. ” I know it is not a lot a month [the premium], but for some people that’s going to be significant.” Brandt mentioned school bus drivers, janitors and lunch ladies who collect smaller pensions than hers.
Too many sick people
Cowell said the new board voted at its first meeting in January to move ahead with a five percent increase in premiums that had been written into the state budget by legislators. But she said one of her priorities was to work with legislators to help them understand the financial realities of a large health insurance plan.
“It’s really just trying to get everyone in the system realistic about what you can actually do and where you just have to pay,” Cowell said. “There’s no silver bullet to reduce medical costs.”
Cowell also said one of her priorities was to strengthen the plan in order to reduce the need for future premium increases.
That’s also the priority for new board member Michelle Shaw, a sergeant at the Harnett Correctional Institution.
“The problem that we are having is we’re seeing healthy people leaving the health plan with their healthy children,” Shaw said.
Shaw explained that instead of being in the health plan, those employees get a supplemental payment.
“They’re taking that $700 and going down the street and they’re paying $250 a month for a family plan versus staying with the state,” she said. Shaw explained the net result is that healthy – and cheaper – people migrate out of the plan, leaving behind sicker people who can’t get cheaper coverage elsewhere. And that drives up costs, and eventually, premiums for the people who remain.
“The people that use the state health plan are working to pay for their insurance,” Shaw said. “That’s basically what we’re hearing across the state. The cost is too high. They cannot afford it.”