Why is the State Employees’ Health Plan suddenly in serious trouble?

WRAL reports today (along with Scott Mooneyham in the Insider) that:

After further study of the plan's finances, analysts said Tuesday the [State Health] plan could have a deficit of about $250 million within a year.

Lawmakers have apparently backed off their idea to drastically up co-pays and co-insurance charges to close the gap and now will dip into the rainy day fund to move things along until next year. However, there is a huge unanswered question prompted by the magnitude of the deficit. Certainly legislators felt that mismanagement was a big part of the problem when they fired plan administrator George Stokes last week but there must be more to the story. After all, last year, the State Health Plan was boasting in news releases of its cost saving initiatives:

Stokes underscored the impact of the State Health Plan's cost savings initiatives: "On behalf of our members and taxpayers, and in an era of dramatically increasing health care costs, I asked the General Assembly for less money in the recently approved two-year budget than was in the previous two-year budget. Going forward, the State Health Plan will continue this sharp focus on affordability and cost savings."

One possibility. Did the move away from a traditional indemnity health plan to NC Blue Cross managed care help create this sudden deficit? Just two weeks ago, the health plan stopped its traditional plan and now requires employees to sign up for one of three Blue Cross managed care plans. Blue Cross was running the traditional plan as well – they paid claims, etc. – but the move to Blue managed care organizations was a huge change over the last couple of years.

Were new contracts with Blue too generous to the company? Who knows? Although there is lots of talk of "analyst findings", there has been nothing released to the public about what the problem actually is. Even the representatives of the state employees who I have spoken to are in the dark. State employees and the public need clear answers – fast.