By Mark Tosczak
As health care costs continue to rise for large employers, North Carolina’s biggest employer was able to freeze health plan premiums for this year thanks to savings from reduced Medicare Advantage plan rates from UnitedHealthcare.
State Treasurer Dale Folwell said Tuesday that the state’s deal for 2019 Medicare Advantage plans for state retirees cut costs for the state health plan by $55 million. The state pays for Medicare Advantage plans, which typically come with an expanded set of benefits beyond what traditional Medicare provides, as a way of providing retirees with the health benefits they were promised.
The state negotiated lower premiums, but the biggest cost reduction came from a temporary suspension of the health insurance fee charged by the federal government under the Affordable Care Act.
Most of the savings — about $40 million — will be used to freeze premiums for state employees.
“We’ve got to balance this thing out with younger, healthier participants,” he said.
Costs continue to rise
The freezes in premiums come at a time when large employers across the country report that health care costs continue to rise. The National Business Group on Health released a study Tuesday that forecasts that in 2019 the total cost of medical and pharmacy benefits will rise 5 percent for the sixth consecutive year.
The State Health Plan spends $384.95 per member per month — more than $4,600 per year for each person covered by the health plan. Members also typically have out-of-pocket costs, such as co-pays.
Folwell wants to stem health care cost increases and whittle down a $35 billion unfunded liability for future retiree health care costs. The state pays retiree health costs annually as part of its budget. But about a decade ago, a change in accounting rules required government agencies to start estimating the future cost of retiree benefits and disclose it on their financial statements.
For North Carolina, the result was a sudden, large liability on its balance sheet.
Folwell said freezing premiums for employees “was an act of good faith.” In exchange, he wants health plan members to be watchdogs. A mailer sent to state employees says “The sustainability of your State Health Plan benefit is at risk, and its fate is in your hands.”
The brochure and a website for members ask them to do three things to “become a State Health Plan Watchdog”:
- Carefully review their explanation-of-benefits statements to make sure all charges are appropriate.
- Maintain good health by getting regular check-ups and recommended screenings.
- Use online tools, such as those provided by Blue Cross and Blue Shield of North Carolina and CVS Caremark, to look for better prices for services.
The treasurer’s approach is a new one, and welcomed by state employees, said Ardis Watkins, director of government relations for the State Employees Association of North Carolina.
“With the health plan, I think what we’re hearing we like,” she said.
Historically, she said, when health costs rose, the state raised employee premiums.
“We had evidence, from the very consultants who worked for the plan, that the plan was seriously overpaying compared to market,” Watkins said. “That made no sense to state employees when they were being asked to give more.”
Folwell also touted, in July, a shift of the health plan’s anti-smoking services from QuitlineNC to CVS Caremark, the same company that provides the plan’s drug benefits. That move saved $450,000 per year, he said.
The State Health Plan has unveiled new explanation-of-benefit statements that are easier to read and understand. And Folwell’s office is working on a list of 10 questions that patients could ask at a doctor’s office or hospital to better understand the cost and value of the services they’re getting.
Folwell’s department also continues to invest in technology to improve how they collect and analyze health care spending data.
The ultimate goal, Folwell said, is to enable people to understand the cost and value of services before they receive them. “At the end of the day we need to have the price on the product in the aisle,” he said.
That’s easier said than done, though. Research suggests that even when people have the ability to compare prices for different health care services, they don’t always.