Proposed NC govt health plan charges smokers & obese higher premiums
N.C. health plan changes target smokers, obese
By Dan Kane
(Raleigh) News & Observer
Posted: Thursday, Feb. 19, 2009
Amaka Flynn talks to her daughter Charleigh, 4, as her husband, Darrell, plays with their son Justin, 8. The Flynns, state workers, fear changes that would raise their health costs.
RALEIGH If you are a state employee who smokes or is seriously overweight, you might want to quit smoking or drop some pounds in the next year.
State legislative leaders rolled out a bill today that seeks to keep the State Health Plan solvent by reducing some benefits and raising premiums by less than eight percent each year over the next two years. Those members who smoke or are seriously overweight would be forced into the state's most expensive health coverage option that carries the highest deductibles and co-payments.
Jack Walker, the plan's executive administrator, said smokers and overweight employees are the most costly to the plan and therefore should shoulder more of the burden. The average additional cost to the plan for each smoker is $2,000 a year, he said, while the plan takes a $2,360 hit for each employee who weighs 35 percent or more above what is considered fit.
Those costs create a major problem for the health plan, which covers roughly 660,000 state employees and their dependents.
The plan spends nearly 90 percent of its money serving the chronically ill, who make up half of the membership. Trends show the chronically ill population exceeding half the membership in future years.
Smokers would have to quit or join a cessation program by July 1, 2010, to stay on a less expensive plan. Those who are seriously overweight would need to get themselves in better shape by July 1, 2011, to stay on a less expensive plan. There would be no exceptions for smokers, but those who would be classified as overweight might get a waiver if they can show they don't fit the standard or they cannot drop their weight for medical reasons.
Walker said the plan also needs to attract younger members and their dependents because they tend to cost the plan less. The average age of members who are not on Medicare, the federal insurance for seniors, is 46 years old.
The typical plan has an average member age of about 33 years, Walker said. Exacerbating the problem is the fact that younger, healthy employees are opting to get cheaper private coverage for their dependents instead of putting them on the plan and paying the premiums.
"The younger people are not here," Walker said.
The legislation carries some pain for nearly all the members. It eliminates a popular option that had the lowest deductibles and co-payments, but played a major role in causing the health plan to run out of money. The plan needs roughly $250 million in the next few weeks just to keep paying its bills.
The total cost of the legislation to taxpayers would be roughly $580 million over the next two years. A little less than half of that — $250 million — would come from the state's rainy day fund to cover the current shortfall.
The legislation would put an end to subsidized basic eye exams, raise co-payments anywhere from $5 to $40 and increase deductibles anywhere from $300 for network providers to $600 for providers outside of the network.
Premiums would increase from 7.3 to 7.9 percent each year for the next two years. But that is a far lower percentage than the 25 to 30 percent increases that lawmakers had been discussing.
Walker said he is also looking for savings by setting up a new pharmacy initiative for chronic care drugs and by encouraging more use of cholesterol reducing drugs. Many members who should be taking the drugs aren't, and that typically leads to far more expensive maladies such as strokes and heart attacks.
Representatives of three major public employee groups said they were encouraged by the legislation.
"I think this is a reasonable approach from what I've heard so far," said Cecil Banks, the government relations manager for the N.C. Association of Educators, which represents teachers.
Chuck Stone, who represents the State Employees Association of North Carolina on health care issues, said he, too, found a lot to like in the legislation. He praised the plan for seeking to curb smoking, though he was not ready to sign off on that proposal or the one affecting overweight members.
But Stone also said the legislation illustrates a serious problem with state government: Its pay and benefits are not attracting and retaining younger workers.
Lawmakers at today's presentation, though, noted that other states require employees and retirees to help pay premiums. North Carolina picks up that tab but does not pay for dependent premiums.
Rep. Mickey Michaux, a Durham Democrat and chief budget writer in the House, suggested he may want to increase the transfer from the rainy day fund to as much as $350 million to reduce the premium cost. Walker said the additional money could shave another percentage point off the premium increase.
The legislation is sponsored by Senate Majority Leader Tony Rand of Fayetteville and House Majority Leader Hugh Holliman of Lexington, two Democrats who lead the committee that oversees the health plan. Rand said the legislation would be run through the Senate and then taken up by the House. He said it needs to pass by April 1.
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Proposed NC govt health plan charges smokers & obese higher premiums
