This article was originally published in the Raleigh Telegram on Mar. 31, 2009
When was the last time you went to the doctor and asked her how much a procedure costs? If you’re like most people; probably never. You pay your co-pay of $20 or $30 and that’s it. But someone else is paying the remaining balance on that bill, and for the State Health Plan, that bill is paid by the taxpayers.
The N.C. Senate recently approved S287, what many are calling a "fix" to the financial problems of the State Health Plan. The problems with the plan have been widely publicized – it’s underfunded, needing an immediate injection of $250 million and upwards of $600 million over the next few years to maintain fiscal solvency.
However, S287 fails to fundamentally solve the problems that got the state into the current crisis and sets the system up for further failure and need for taxpayer bailouts in future years.
The State Health Plan provides health insurance for all state employees who enroll along with many municipal employees whose towns have asked to join the plan. Enrollees pay no monthly premium for their insurance but pay routine co-pays when they go to the doctor and have yearly deductibles that have to be met. Taxpayers pick up the tab for everything else.
The problem with this system is there is no incentive on the part of the individual to contain costs. As long as someone can afford the co-pay, they can continue to consume health care regardless of cost or need.
Given the crisis in solvency of the State Health Plan, now is the time for legislators to look for real reform. Instead of continuing to pour money into a plan that endlessly pays all costs, legislators should look to give employees a stake in the system and rely on employees to help contain expenses. Here are three steps legislators should explore to remake the State Health Plan.
First, allow for a cafeteria plan where employees have multiple options to choose from to get the coverage that best fits their need. If an employee continues to choose a plan that does not require a monthly premium, they can do so, but they pay higher co-pays and deductibles.
Whereas other plans may require a premium but offer lower co-pays. Giving employees multiple options gives them an opportunity to choose the plan that best fits their family’s needs, saving the taxpayers money and allows competition between options in the plan. The federal government uses this system, the state should as well.
A cafeteria plan would open the door for a High Deductable Health Plan combined with a Health Savings Account (HSA) to be an option. HSAs give employees an opportunity to own their own health care and carry that coverage and money with them from job-to-job.
HSAs are favored by many younger workers who realize the need to have some type of catastrophic coverage, but do not often go to the doctor. One of the biggest challenges the State Health Plan currently faces is getting these younger families enrolled in the plan. An HSA option will allow more families to have coverage and allow individuals to control and manage their health care costs.
A third recommendation would be to allow employees to choose a lump sum payment in lieu of enrolling in the State Health Plan. The state would set a reimbursement rate that is less than the average cost per employee to enroll them in the State Health Plan, which would be paid directly to the employee.
That employee would then be free to choose to spend that money however they wish, whether that is on purchasing health insurance on the open market or paying for health care expenses out of pocket.
This allows an employee to truly own their own health care instead of being dependent on the State Health Plan. It also gives the employee portability to take their health insurance with them from job to job should they leave state government.
The General Assembly is being forced to take action to ensure the solvency of the State Health Plan. To completely ignore this opportunity to make fundamental reform the system in order to bring cost containment to the plan will be a disservice to not only the State Employees who depend on the plan, but to taxpayers as well – the ones who are ultimately paying the bill.
I have long been a big fan of health care savings accounts. My husband had one with his previous employer and has one with his current employer as well.
The biggest problem, however, with the HSA’s are that they are non-transferrable. If you do not use the money by year’s end, the money goes back to the employer.
This is where our political leaders and healthcare officials alike need to step up to the plate and try and come up with a plan to make HSA’s more attractive to individuals.
I have often said that it could quite possibly be the answer to the healthcare crisis in this country.
If an indidual could have a large sum of money set aside from day one of employment, and have that money accumulate over time and even be able to transfer from one job to another….this would create less dependence on insurance companies and would illiminate alot of “red tape” at hospitals, clinics, and doctor’s offices.
I also believe it could contribute to the reduction in medical costs as healthcare providers will be able to attain payment up front.
There will ofcourse be opposition to those who do not like the idea of self-riliance and would much rather have “someone else pay for it…” But, I truely believe that given the proper education on the topic, most people would rather have the Healthcare Savings Accounts and then only have insurance for the larger, more serious health issues.
Think of this: A young, healthy person starts out his career and opens up a HSA. He also has the ability to have a higher-deductible, low-premium insurance policy tucked away for the “unexpected.”
This HSA builds over a few years and this young person decides to marry and have children. The couple is now able to contribute a large amount of money towards the pregnancy and birth.
This plan can be also be used to pay for any “planned” expense, like pregancy, braces, knee-surgery….the list goes on and on….
Again, policians need to come up with a way to make HSA’s more attractive to folks and need to make them transferrable. When people realize they can save this money from year to year without penalty, this solution becomes a winner!
Thank-you,
Tina Smiley
Burlington NC