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It’s time to fix the state health plan

Posted on January 7, 2010 by Staff

Adam Linker

North Carolina now has an unprecedented opportunity to fix its broken State Health Plan.

The State Health Plan Blue Ribbon Task Force that recently convened in Raleigh brings together lawmakers, state officials and other stakeholders to discuss ways to improve the insurance plan that covers more than 660,000 current and retired state employees. And the group faces formidable problems.

Former State Health Plan executive director George Stokes signed a no-bid contract with Blue Cross Blue Shield several years ago without first consulting a lawyer. The onerous terms of that contract nearly bankrupted the State Health Plan last year.

In the last session of the General Assembly, a State Health Plan bailout bill was passed amid mounting panic. The legislation was subject to intense lobbying. Arms were twisted. The untouchable Blue Cross escaped untouched. Pharmacists and drug companies emerged unscathed. State employees got smacked with higher out-of-pocket expenses and benefit cuts. That’s where we are now.

The State Health Plan desperately needs structural changes.

Lawmakers want to retain control over the plan because it constitutes a significant chunk of the state budget. But lawmakers have shown a willingness to cave when special interests apply pressure. Legislators are now meeting regularly to get updates on State Health Plan finances. But the interest of lawmakers is fleeting; when the plan is back on autopilot, legislative oversight likely will be sporadic. Then another crisis will hit.

To maintain strong and consistent oversight, the State Health Plan should be moved to an independent commission or to the executive branch. That is how it’s done in most states.

Along with the impressive cost sharing imposed on state employees in the State Health Plan bailout bill, lawmakers also added downright bizarre wellness provisions that will require all employees to undergo random testing for nicotine use. The General Assembly adopted these measures in a desperate bid to save money. Now it’s clear that the proposals are not likely to save money. They are also intrusive and unfair.

The idea is to test state employees for tobacco use. Workers who are upfront about smoking will have the chance to join a smoking-cessation program or move to a less generous insurance plan. All state employees will be randomly tested to ensure that everyone is telling the truth about tobacco use. Originally, the State Health Plan said it would do cheek swabs at work. Now state employees will be required to get a cheek swab at an offsite location before or after work.

In two years, the state will start charging more to obese employees who do not meet body mass index standards, although there are no plans for random weight checks.

The Blue Ribbon Task Force should kill the random-testing idea. It is remarkably invasive. It is also not cost-effective. No other state does random testing of the sort proposed in North Carolina because it doesn’t make sense.

The idea of shifting overweight employees into a new insurance plan also should be nixed. The State Health Plan is not going to successfully bully people into slimming down.

That leaves us with the smoking provisions. The State Health Plan could design a fair system that encourages employees to stop smoking. We could ask state workers whether they use tobacco products. Users of tobacco products then could be encouraged to join a smoking-cessation program. If they decline the smoking-cessation program, then the State Health Plan could charge an annual fee.

Any fees state employees are charged for declining to join a smoking-cessation program should be adjusted according to income. The State Health Plan could charge an annual $150 fee to employees earning $30,000 per year and $500 to employees earning $100,000. If at some point during the year, the employee joined cessation counseling, then the fee should be refunded. Employees should not be fined for smoking. They should only be fined for not attempting to quit.

And under no circumstances should a state employee move to a new insurance plan as punishment for violating wellness requirements.

These are only a few small steps to fix the damage that already has been done by the State Health Plan bailout bill. There are better ways to save money in the future. But state employees are already suffering from higher out-of-pocket expenses. It is unconscionable to shift them back and forth between insurance plans and subject them to random testing.

Administrators at the State Health Plan do not make fairness to state employees a top priority. But state legislators represent the people, not the State Health Plan. They should rewrite the wellness provisions, surrender control of the State Health Plan and make recommendations to strengthen benefits for the public employees who make our state great.

Adam Linker is a policy analyst at the North Carolina Health Access Coalition.

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