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Lower health insurance premiums or pay raises?
That's part of the budget equation the state General Assembly faces each year
as legislators decide how to distribute dollars, a state official told
employees at a July 21 community meeting on health insurance sponsored by the
Employee Forum and Faculty Council.
David DeVries, executive administrator of the State Health Benefits Office,
said his office's failed proposal that the state contribute $25 to dependent
coverage for employees on the State Health Plan would have cost $26 million in
the first year and $35 million in the second.
For comparison's sake, it takes $55 million to fund a 1 percent pay increase
for state employees, DeVries said.
"I think that for must of us when it comes down to the wire, we'd rather see
the money go toward salary increases than benefits," DeVries said.
The community meeting came with the backdrop of a 30 percent premium jump for
the State Health Plan and increases for state-offered health maintenance
organizations as well. Increases will take effect Oct. 1. (See box to learn how
to get information on rates.)
While the state will continue to cover the entire cost for employees on the
State Health Plan, children's and family coverage also will rise 30 percent.
DeVries said he realized that was high but added that the increase is the first
for the plan in eight years.
DeVries said the greatest force driving increases is the cost of prescription
drugs. State Health Plan claims for prescription drug coverage rose 18 percent
per capita from 1998 to 1999, he said.
DeVries also said high costs have kept the General Assembly from pursuing a
State Health Plan employee/spouse coverage option at a lower rate than
employee/family coverage, the category employees now must choose if they want
to insure just themselves and their spouse.
Spouses tend to be older and need more care, therefore costing more to insure:
In 1995, spouses made up 52 percent of State Health Plan enrollees but
accounted for 78 percent of claims, DeVries said.
On a more upbeat note, the State Health Plan will include a prescription drug
card in 1999-2000. The card will limit the amount employees will have to pay
out-of-pocket for prescriptions to no more than $20 for a 34-day supply,
depending on the type of drug purchased. This co-payment will not be credited
to employees' deductibles.
The card program will take effect Jan. 1, 2000, and until then employees will
continue to pay full price for prescription drugs until their deductible is
met, with the amount paid credited toward their deductible.
Pharmacies -- including major chains -- now are being lined up to work with
the card program, and DeVries said he expects "virtually" all to accept the
card. Employees will get two cards and additional cards may be requested, he
said.
As for HMOs, DeVries noted that out-of-pocket costs for five of the six
offered to employees living or working in Orange County will decrease for
employee-only coverage. That's because the state will contribute some $188
toward HMO coverage -- compared to this year's $144.60 contribution. (See box
on page 8 to learn how to get information on HMO availability.)
DeVries said that one of the six HMOs, Kaiser, has announced that it wants to
sell its North Carolina operation. Should that happen, he said, the buyer will
be expected to honor Kaiser's contract with the state.
If the buyer fails to do so -- or if Kaiser can't find a buyer and closes its
North Carolina operation -- employees enrolled with Kaiser will get six months'
notice and will have the chance to switch to another HMO or the State Health
Plan, DeVries said. Any such moves would be made without a waiting period for
pre-existing conditions.
DeVries said State Health Plan premiums won't increase for 2000-01, as this
year's rates cover two years. But HMO rates could change next year, he said.
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