I haven't seen much media coverage of the latest news from the North Carolina State Health Plan, which insures more than 650,000 people across the state. The only documents I've seen are not encouraging.
The original budget estimated that the SHP would have a $228 million cash balance by the end of July 2008, according to Walker. The actual cash balance at the end of July was $72 million.
Why the shortfall?
Dr. Walker stated that both medical and pharmacy claims increased 7.2% during the past fiscal year as opposed to the projected increase of 1.9%.
And what accounts for the original rosy projections? Higher than expected administrative payments to Blue Cross and Blue Shield of North Carolina. That's right, the same insurer that was overcharging the state's Health Choice program is also sinking the SHP.
The SHP Board went into closed session in August to discuss the "shared savings component of the BCBSNC contract." There's no word about what happened in that meeting.
So what does all of this mean?
Using a claims projection of 9 percent the SHP says that it needs $300 million from the state for 2009. The SHP says that it needs $100 million of that in January. Using a 10.5 percent trend model the SHP says it needs $325 million for 2009, $125 million of which it needs in January.
The state, in case you missed it, will not have a ton of cash sitting around in January.
And the North Carolina Medical Society is warning doctors that the SHP is likely to delay payments to providers if the state does not pony up the money.
State employees are worried that all of this will end up costing them more at the doctor in the form of higher copays and deductibles. It could also mean increasing the premiums for dependent coverage.
Two groups from the state auditors office are conducting performance and financial reviews of the SHP, which should shed some light on the situation. The auditor has not shown the same deference to BCBSNC that legislators exhibit, so hopefully the report helps explain the higher administrative charges.
Word is that the auditor could release one or both of the audits in early November. We'll be watching.