Health Insurance costs rise for NC

RALEIGH



The health insurance plan for North Carolina state workers and retirees will need a cash infusion of at least $220 million from the General Assembly to cover increasing medical expenses through mid-2007, the plan's administrator says.



Even if that money is provided, plan members can expect another round of benefit cuts and an increase of at least 12 percent in family-coverage premiums.



Expenses within the 550,000-member Teachers and State Employees Comprehensive Major Medical Plan are rising sharply mainly because the typical member is middle-aged and starting to develop such chronic health problems as high blood pressure and heart disease.



In recent years, the plan has cut benefits, reduced payments to doctors and hospitals who care for members, and raised members' dependent coverage premiums.



The General Assembly agreed in 2003 to inject $338 million into the plan through mid-2005 to help meet double-digit increases in health costs and keep it solvent.



The state pays all the cost of workers' and retirees' premiums, but members pay 100 percent of dependents' premiums.



"I would like the coverage for dependents to go up as little as possible to keep it in reach for the average population," said Jack Walker, the state plan administrator. He has drawn up several budget scenarios to present to the General Assembly, which must approve the plan's budget.



Walker favors a strategy that calls for a $220 million appropriation and a 12-percent premium increase. That would raise the cost of coverage for a spouse and children to about $478 a month.



Walker said that benefit changes could include raising members' annual deductibles and to increase the amount that members are required to pay toward care in a single year after they have met their deductible. The current deductible is $350, and the annual out-of-pocket maximum is $1,500.



If no changes are made to the plan, family premiums would rise by about 20 percent over the next two years, and the General Assembly would have to come up with an additional $375 million to keep the plan solvent to 2007, Walker said.



That amount may be difficult for legislators to swallow. They will return to Raleigh next month with a potential budget gap of $1.26 billion for the 2005-06 fiscal year, according to a recent legislative research analysis.



Walker also recommends spending $50 million for programs to help workers either improve or maintain their health.