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State Health Plan Shortfalls and NC Blue Cross Profits

The North Carolina State Health Plan “only” has a $50 million shortfall so far in 2008 (numbers are through October) – this is far lower than the $122 million shortfall expected just a few months ago as recounted in an optimistic letter posted Dec. 23 on the State Health Plan’s website. However, according to an earlier report from the NC State Auditor, projections are for a shortfall in excess of $250 million through 2009. Other rumors have the shortfall for 2009 exceeding $800 million.

Meanwhile, as Adam Linker recently noted, profits at health insurer NC Blue Cross are up 5% over the same time last year. NC Blue also happens to administer the State Health Plan – although they don’t decide premiums, policy coverage, or other major questions that can affect health costs in the state health plan (state legislators and the state health plan administrator do that). However, nonprofit NC Blue does get paid a substantial amount for their SHP administrative duties and certainly could be profiting more than they should from this contract.

This brings up two questions:

1. Does the State Health Plan have any idea what is going on with its finances? This shouldn’t be that hard. Sophisticated software is routinely used by health insurers to project health claims and costs over multiyear periods with remarkable accuracy. We have had months of hearing different projections of shortfalls from SHP. Why?

2. Many state employees reject paying the required $489/mo premiums for standard plan family coverage. They find coverage for younger and healthier family members is cheaper by buying directly on the individual market through NC Blue Cross who dominates the sale of non-group coverage in NC. Does anyone other than me find it strange that while the state health plan is struggling with sharply increasing costs for members who are generally older and sicker, NC Blue Cross is turning a handsome profit with individual coverage aimed at children and younger and healthier adults? Are the policies of the state health plan serving to inadvertently enrich NC Blue Cross who is – ironically enough – administering both pools?

7 Comments

  1. Aftercancer

    January 5, 2009 at 10:03 pm

    Irony thy name is State Health Plan. I work in early intervention (kids under age 3). The Federal government requires that services be provided to children in the natural environment ie; home. So, for example, a physical therapist would go out and treat the child in their home. State health plan will not pay for it unless it is in a clinic.

    In other words, if my child needed the services I provide I couldn’t get it paid for with my insurance….

  2. Doremus Jessup

    January 6, 2009 at 7:30 am

    remember before the collapse when state employee’s had a choice of 8 HMOs with no deductible and no co-insurance? Those were the days.

  3. Adam Searing

    January 6, 2009 at 10:06 am

    State employees – including my wife – who teach our kids, fix our roads, investigate crimes, make sure our food and water is safe, and do thousands of other jobs deserve a decent health plan. They also don’t deserve to work for the state for 20 or 30 years and then not have a health plan they can depend on when they retire.

    This isn’t an unreasonable expectation – anyone who works in the private sector has the same need for health coverage they can afford at all stages of life.

    This just says to me that’s why we need comprehensive health reform.

  4. HealthCare Now

    January 6, 2009 at 3:54 pm

    how about Medicare For All? HR 676, One Plan, One Nation?

    After observing the medical service scene in Raleigh for 20 years Im not sure I trust the so-called ‘experts” in this state to solve the problem.

  5. [...] of other questions to ask, some of them about the administration of the plan by NC Blue Cross. Adam Searing asked them a couple of weeks ago in a post on the Progressive Pulse. Questions like this one about the high cost of dependent care in the state health plan, high [...]

  6. [...] questions about the NC Blue Cross contract to administer the state health plan. (We’ve been interested in this for a while here at the Pulse.) Reporter Matt Willoughby from the NC News Network mentioned [...]

  7. Jason

    March 12, 2009 at 1:01 pm

    We’ve seen an increase in NC state employees shopping for better altenatives
    to the state health insurance plan. We handle a lot of child health insurance
    customers and many state employees have found they can insure their children
    cheaper plan with similar or better benefits by putting their child on an
    individual plan. If the General Assembly raises rates or lowers benefits I
    expect more and more employees will do the same. This could end up hurting the
    plan more than it helps. You can view

    child rates for the NC state employees health plan here
    .