$250 million cash for North Carolina health insurance program

The General Assembly moved closer to getting a $250 million cash injection for the state employee health insurance program by the end of the month when a Senate panel agreed to make wide-ranging changes to the plan.

The one-time funds were attached to a bill that also includes premium increases for families, financial incentives to stop smoking and lose weight and a new prescription drug program for people with chronic illness.

After a plea by the State Health Plan's chief that it needs money immediately, members of the Senate Select Committee on Employee Hospital and Medical Benefits recommended the measure despite complaints from small pharmacies and state worker groups.

"If you do not pass this bill, we won't make payments until you do because there's just not enough money in the till to make payments to providers," said Jack Walker, the plan's executive administrator. The bill, which has yet to go through the House, was to be heard Wednesday by the Senate Appropriations Committee.

In all, the proposal requires the state to spend at least $625 million in taxpayer money through mid-2011 to keep the plan afloat, along with higher copayments and deductibles and other eroded benefits for the State Health Plan's 667,000 public employees, retirees and their family members.

The most generous — and unprofitable — of three current coverage tiers offered to members would be eliminated.

Employees who insure their spouses and children will see their premiums increase by 7.8 percent annually for the next two years. Employees will continue to pay no monthly premium for their own coverage.

But the bill's changes — which on average could cost each plan member an additional $466 in out-of-pocket costs over two years — prevented premiums from rising by almost 31 percent over the same period, said Sen. Tony Rand, D-Cumberland, the committee chairman.

Groups representing teachers, state employees and retirees asked lawmakers not to make such deep benefit cuts. North Carolina hasn't funded the plan well enough over the years, and now the problems are coming home to roost, said Ardis Watkins, a legislative lobbyist for the State Employee Association of North Carolina

"We are asking you not to take this out on the members of the health plan," Watkins said. "We're asking you that you find another way to do this."

Some senators complained about a cost-saving measure that would require some employees to get long-term drug prescriptions for treating chronic conditions such as diabetes and high blood pressure through an in-network pharmacist or by mail order.

Independent pharmacies in small towns will lose business due to the mail order provision and can't make a profit on the in-network reimbursement rates, said Mike James, a lobbyist for the Association of Community Pharmacists.

"They're going to have to lay off employees and at worst go out of business," James said.

The plan also will force smokers to receive the less generous coverage tier starting in July 2010 if they don't quit smoking. Enrollees considered very obese also can receive the more generous coverage if they lose enough weight by mid-2011.