NC News: N&O Article on State Health Plan

State could shift health plan oversight

RALEIGH Oversight of the financially strapped North Carolina health insurance plan for 665,000 state employees, retirees and their dependents should shift from the General Assembly to an executive branch agency to operate it more efficiently, a legislative task force concluded Tuesday.

The panel, made up of lawmakers, state officials, health experts and state employee advocates, also agreed the State Health Plan for Teachers and State Employees needs a strong and independent governing board that can make policy decisions and hire and fire the plan's chief executive officer.

State law right now gives the final say on the chief executive to the chairmen of the legislature's oversight committee, which also has become more involved micromanaging plan benefits to help fill gaping fiscal holes between premiums and more than $2.5 billion in health care expenses annually. The legislature approved a $675 million bailout of the plan last year that raised premiums for dependents and eroded benefits.

An outside consultant's report said the current structure of the plan as an independent agency doesn't ensure adequate oversight and monitoring, and the plan's current trustee board is too weak.

The proposal would make the health plan just like any other state agency that would have to seek funding annually, said Rep. Hugh Holliman, a Democrat from Lexington who is a co-chairman of the task force and the current oversight committee. But Holliman said it's clear day-to-day operations shouldn't be performed by the legislature.

Critics of the health plan said shifting oversight to the executive branch and creating a board with more authority would give health experts greater influence and limit political interference that has led to a poorly run plan.

Holliman warned that shifting the plan to the executive branch won't eliminate increasing health care expenses for state employees and their dependents. The plan could require an additional $572 million through mid-2013 to maintain current benefit levels and handle more patients, according to the legislature's analysts.

Rep. Dale Folwell, a Winston-Salem Republican who is a likely leader on State Health Plan issues in the new GOP majority next year, was displeased because the recommendation didn't discuss how to reduce the state's $33 billion unfunded liability for the projected medical expenses of state government retirees.