State health plan gauges options

The N.C. State Health Plan has begun an ambitious effort to explore new coverage options for state employees, potentially undercutting the UNC system’s effort to establish its own health care program.

State lawmakers recently granted broad authority for the State Health Plan to establish a more cost-effective benefit structure.

Health plan Executive Administrator George Stokes, a former chief executive at Kaiser Permanente — one of several alternative providers which used to be offered to state employees — said he hopes to negotiate a preferred provider option for all state workers by July 1.

“Our timetable for all this is really aggressive,” he said. “We clearly have our work in front of us.”

The UNC-system initiative, meanwhile, faces an uncertain future. It has effectively been put on hold pending a more thorough review by a legislative study committee.

“There were a lot of questions about it,” said Rep. Verla Insko, D-Orange. “About whether or not it would have an impact on the financial viability of the state health plan.”

The university proposed its own pilot program earlier this year amidst mounting concern about the cost and quality of the state’s employee health benefit.

But Stokes said those issues aren’t unique to the university system, and should be addressed on behalf of all state employees.

A revamped State Health Plan that includes a competitive preferred provider option should accomplish many of the system’s goals, he said, and possibly eliminate the need for a separate plan.

“I think we’re on the same page in terms of what we need,” he said. “Hopefully, if we’re successful, there won’t be a need for two separate systems.”

He said he would like to work out a preferred provider option network with health care providers in all North Carolina counties, with no deductible, lower dependent-coverage costs and a specific option for employee-spouse coverage.

“We’re certainly listening to our members, and they’ve been saying for a while that they want a PPO with an employee-spouse tier,” he said.

“We really want to attract some of our members whose spouses are in other plans, and attract the younger population back into our plan.”

Sherry Melton, spokeswoman for the State Employees Association of North Carolina, said a preferred provider network would give employees some flexibility in choosing a health plan.

“While the benefits will be different in the PPO and the State Health Plan, so will the costs,” she said.

For example, even though the state plan has no premium, a PPO might charge a premium in exchange for more comprehensive coverage.

Stokes also suggested that a single PPO could include multiple coverage options, allowing individual members to choose between greater costs and richer benefits. “It has to be competitive,” he said.

System officials have long argued that the existing benefit package — the only option offered to all 91,678 state employees — was an obstacle in recruiting and retaining faculty.

The system’s plan was designed to provide university employees lower health care costs and a greater range of coverage options.

But Melton said lawmakers should be wary of treating a specific group of state employees differently from all the others.

“I think there was concern about removing any employees from the state health plan pool,” she said. “Any time you reduce the size of a pool, you’re going to reduce negotiating power.”

University officials said progress on the system’s initiative will depend on the provisions of any new state plan, which will require final approval by a legislative committee, and on how quickly it can be implemented.

With the next session of the legislature scheduled to begin in May, any changes to the state plan will have to wait until then.

“It depends on what the design looks like,” said Kitty McCollum, UNC-system associate vice president for human resources.

“We’re interested in trying to improve the state’s plan, and that’s why we’re so pleased to see that they are moving forward.”

Contact the State & National Editor at stntdesk@unc.edu.