State Health Plan – State Employees Actually Cheaper to Insure

State workers, despite all the hype from legislators and state health plan administrators about how much older and sicker they are, are actually less expensive to insure than the average worker at a business in the South:

$4,590 – Average annual cost to cover one employee at a business in the South in a PPO plan

$4,156 – Annual cost to cover one NC State employee in the PPO plan

That’s right – a NC state employee is over 10% cheaper to insure than the average employee at a business in the South. And the South has the lowest rates in the country. Makes you think twice about all the rhetoric coming out of the General Assembly around the state health plan. We need to control health care costs for everyone – because the problem is universal. State employees are actually doing better than average.

19 Comments

  1. Rob Schofield

    June 4, 2009 at 9:53 am

    This is very powerful info. Seems like it’s more proof that the real problem isn’t obesity or government “bureaucracy.”

    Rather, it’s the commodification of health care — the fact that we’ve transformed health care into a profits uber alles system in which a complex web of professionals and corporations are enccouraged to do everything they can to extract the maximum amount of money possible from the system.

  2. AdamL

    June 4, 2009 at 12:04 pm

    Wow — it doesn’t take a PhD to see that the state is overselling the “death spiral” line.

  3. renee

    June 4, 2009 at 3:08 pm

    This is good information, but here is something to ponder. If I were young and healthy but had to pay for insurance I might opt out. If I were older and more prone to sickness, I would purchase the insurance. Therefore, I am not sure if the above figures can even be compared if we are looking at different population samples.

  4. Adam Searing

    June 4, 2009 at 3:14 pm

    In NC individual state employees are covered without paying any premium themselves. So employees have no incentive not to take the individual coverage.

    Kaiser’s industry standard survey of employers on health coverage is the most comprehensive in the nation. The figure is an average cost for a single employee in the average PPO plan in the South. So, same region, answers from many, many employers, and all averaged together.

    If anything, according to the GA and state plan, their pool of state employees is older and sicker than average – so they ought to be more expensive to insure, not less.

  5. Kyle

    June 4, 2009 at 7:41 pm

    what it shows me is that the General Assembly is short changing state employees. If they were paying the state average for private sector, the State Employees and Teachers Health Plan wouldn’t be running $300 million deficits.

  6. Fred

    June 5, 2009 at 9:44 pm

    Ya’ll are looking at this backwards. It is saying that BCBSNC is covering us for less then average, which means they are doing a good job after all!

  7. wondrgrl

    June 6, 2009 at 4:19 pm

    Isn’t that special–state employees in NC are healthier than average employees in the South and cost less to insure. Then why are they being scapegoated by the state legislature and asked to submit to testing to ensure appropriate BMI and no smoking? And lest I forget, this is on top of a 17% increase in the cost to insure dependent children over the next 2 years, up from the already higher than average dependent care costs. I say file suit and quit being mistreated by the state legislature! Too bad they do not have the right to collective bargaining. This allows the balancing of the budget on state employees’ backs on a regular basis. Been there done that.

  8. Anon

    June 11, 2009 at 3:23 pm

    Fred, think about it, the State is paying a lower premium because employees are paying higher deductibles, copayments and annual out of pocket costs.

  9. [...] Adam Searing pointed out recently, state employees are less expensive to insure than the average commercially insured [...]

  10. Kyle

    June 22, 2009 at 1:41 pm

    “Fred, think about it, the State is paying a lower premium because employees are paying higher deductibles, copayments and annual out of pocket costs”

    Not hardly. Check with most private insurance plans. The vast majority still pay higher deductibles, copayments, and annual out of pocket costs. It is not that state employees are healthier or cheaper to cover, it is that the General Assembly does not put enough money in the plan to cover the costs.

  11. Jennifer

    September 23, 2009 at 10:00 pm

    so is there actually an option for OPTING OUT of Insurance if you are a teacher?
    My husband has better insurance i would like to be on his plan.
    thanks

  12. Dorian

    November 9, 2009 at 7:45 am

    “Then why are they being scapegoated by the state legislature and asked to submit to testing to ensure appropriate BMI and no smoking?”

    Yes, they are being asked and tested for healthy weight standards BUT, they are also allowing anyone in the obese range to still receive the same benefits as a healthy person if they will take a weight management course such as Nutrafit (mynutrafit.com) and they are willing to foot the bill for it as well.

    Sorry, but I see this as an employer being proactive and trying to create a healthier workforce and state.

  13. Zagros Madjd-Sadjadi

    December 18, 2009 at 1:35 am

    “$4,156 – Annual cost to cover one NC State employee in the PPO plan” is misleading. This is the premium cost to the State, not the actual cost to insure the employee. Remember that the State Health Plan is actually running a deficit, which means that the actual cost is higher (since the State will either hike premiums or reduce benefits in order to break even OR it will have to fund the State Health Plan deficit out of general tax revenues because the State Health Plan is a self-insurance plan administered by BCBS rather than insurance from BCBS). In addition, you are not counting the cost of deductibles, co-pays, and co-insurance. I can easily reduce the “cost” of the State Health Plan to ZERO if I use the premium figure . . . by eliminating the State Health Plan. So if you want to state that State workers are healthier, you have to compare equivalent plans and note the out of pocket differences.

    I also object to the notion that some commentators have that State workers do not pay for their health insurance. They certainly do. It is all part of the total compensation package. For example, if the State decided to “charge” the employees $100 a month for their health insurance but gave the employees the $100 in salary the employees would be in EXACTLY the same position as would the State (the State’s reduction in health care premia is completely offset by the increase in salary and the employee’s increase in health care premia is completely offset by the increase in salary). In addition, State workers must pay co-insurance, co-pays, and a deductible. Of course, workers in private companies do as well but unless we are looking at comparable plans, you can tell absolutely nothing about relative health care.

    The key test to see if State workers are less healthy would be to use a directly comparable plan found in the private sector and see what the employer costs would be.

    This is not to say that State workers ARE less healthy (I haven’t seen the evidence either way so I cannot judge that question on its merits) but the figures you cite do not prove your point nor even provide any evidence in support of it.

  14. Zagros Madjd-Sadjadi

    December 18, 2009 at 2:02 am

    By the way, the State subsidy is now $377.22/month ($4,526.64/year)[1] and will rise to $410.80/month ($4,929.60) in the year beginning July 1, 2010[2]. This at the same time that the actual benefits under the plan became less attractive. Yet the State’s costs are still 4% higher than projected through September 30th (down from 8% through August 31st).[3] However, with this trend, the costs will probably be in line by the end of the year (there were higher costs at the beginning of the plan year because the State Health Plan was still paying for expenses incurred in the prior plan year ending June 30th — I know that I loaded up on some of my supplies to beat the co-pay increase that kicked in on July 1st).

    Sources:
    [1] http://www.shpnc.org/pdf/emp_rate_sheet_2009-2010.pdf
    [2] http://www.shpnc.org/pdf/emp_rate_sheet_2010-2011.pdf
    [3] http://projects.newsobserver.com/tags/state_health_plan

    The rate sheets that you used were from 2007. Of course, it may be that you were using 2007 private rates as the basis for comparison but I thought you might like to look at the current rates.

  15. Anon

    December 29, 2009 at 4:26 am

    The reason the state health plan numbers are lower is because the benefits are lower than those offered by most large employers. Even so, Adam’s post shows that key politicians in the legislature, which has consistently proven itself incompetent at managing the state employee health plan, are misrepresenting the facts. The state auditor independently reviewed the state health plan’s governance and recommended that an independent commission run the plan. The legislature ignored this and other solid, best-practice recommendations. Why?

  16. [...] Aon Consulting told members of a legislative committee meeting essentially what Adam Searing pointed out last year, North Carolina state employees are cheaper to insure than the average member of a [...]

  17. ppo web » State Health Plan PPO

    October 15, 2010 at 1:35 pm

    [...] 10.The Progressive Pulse – State Health Plan – State Employees State workers, despite all the hype from legislators and state health plan administrators about how much older and sicker they are, are actually less expensive to insure than the average worker at a business in the South: … $4,156 – Annual cost to cover one NC State employee in the PPO plan… http://pulse.ncpolicywatch.org/2009/06/04/state-health-plan-state-employees-actually-cheaper-to-insure/ [...]

  18. ppo web » NC State Employee Health Plan

    October 15, 2010 at 2:50 pm

    [...] 7.The Progressive Pulse – State Health Plan – State Employees That’s right – a NC state employee is over 10% cheaper to insure than the average employee at a business in the South. And the South has the lowest rates in the country. Makes you think twice about all the rhetoric coming out of the General Assembly around the state health plan. http://pulse.ncpolicywatch.org/2009/06/04/state-health-plan-state-employees-actually-cheaper-to-insure/ [...]

  19. Thom Martin

    March 25, 2011 at 7:09 am

    When I moved from the Penn State health care system to the NC State employees system in 2001 I found that my contribution per month for family care was about 6 times my contribution per month in PA. Yet, my health insurance benefits were considerably worse. My contribution has increased substantially over the last 10 years and benefits have eroded further. Further cuts in what we get for what we pay, plus the state shifting a greater burden on their employees means that we’re all getting a big pay cut this year. The Republicans are waging war on state employees.