State to decide on new health insurance option for some state workers

A question still to be settled in state budget negotiations is how to provide health insurance to thousands of state employees who will be newly eligible for coverage starting in January under the Affordable Care Act.

The issue has been a concern for months, as state agencies must absorb the cost of covering temporary employees who work 30 or more hours a week. The category could include as many as 24,000 employees statewide, though that number may be reduced significantly once state agencies determine their personnel needs and workers' eligibility under federal guidelines. UNC estimates 8,600 work in the university system.

The Senate budget allows the UNC system to go it alone and put out bids for its own plan for these workers, which include graduate student teaching assistants, postdoctoral fellows, student workers, library employees and others. The House budget requires that all employees in the category statewide be covered under a new option in the State Health Plan.

The decision has put UNC at odds with the State Health Plan and the State Employees Association of North Carolina, which have both opposed the university system's authority to carve out a segment of their workers for a separate plan.

We believe allowing individual employing units to separate from the risk pool will create a dangerous precedent and has the potential to be a destabilizing influence on the benefit environment, wrote State Treasurer Janet Cowell and other State Health Plan board members, in a May 30 letter to legislative leaders when the board reviewed options. The State has maintained a commitment to a consolidated risk pool, and the State Health Plan relies on this approach to reduce costs for our members and the State.

UNC leaders had requested legislative authority to negotiate a better price on the open market than the State Health Plan could offer. According to a document listing UNC's talking points, the university system's risk pool of eligible employees is on average 15 years younger than the total population of state employees.

A separate plan for UNC would be cheaper for the university.

Annual cost per employee would be as high as $2,662 if all state workers are pooled together, versus $2,244 for UNC employees alone, said Charlie Perusse, UNC's chief operating officer. The cost for state employees without UNC in the pool could be as high as $2,946. These costs include the state contribution plus the employee premium.

Brad Young, a spokesman in the State Treasurer's Office, said the employee contribution is expected to be about $92 a month, no matter which plan is chosen.

Blind-sided'

Early on, UNC Board of Governors members feared that the new federal requirement would cost the university system $47 million based on the State Health Plan's $5,500 annual cost for other state employees.

A UNC talking points memo obtained by The News & Observer said the university thought it had complete buy-in when the idea for a separate UNC plan was introduced in the Senate. Then, the State Health Plan came out against it. We were blind-sided by this change, the June memo said, equating the higher cost to another budget cut to the University.

Ardis Watkins, director of legislative affairs for the State Employees Association of North Carolina, said it would be a bad precedent for UNC to go it alone on health care coverage.

The UNC employees are state employees, Watkins said. What's next, the Department of Labor health plan? You can't cherry-pick what benefits you want to be a part of and what benefits you don't.

Some good work'

Perusse said the UNC system was grateful to the treasurer, State Health Plan and lawmakers for establishing a more cost effective option that satisfies the Affordable Care Act requirements. The new option is cheaper because it has higher a deductible, yet still meets federal rules.

They effectively cut the cost in half, he said. That's some good work, he added.

Watkins said she hoped all state and university employees would be pooled together once the state budget is settled.

It only makes sense to have the State Health Plan be the most powerful purchaser of health care that it can be, she said.

State to decide on new health insurance option for some state workers