News: CJ Exclusives

Bill blocking State Health Plan changes passes 1st committee test

The House Health Committee overwhelmingly approved a bill blocking State Treasurer Dale Folwell’s controversial State Health Plan reforms while moving up a deadline to study alternatives.

House Bill 184 prevents Folwell from imposing his Clear Pricing Project in 2020 to cut costs and increase billing transparency. He says those steps are crucial to save the financially ailing system before 2023, when it’s projected to run out of money. The committee added an amendment keeping in place a study committee to recommend alternatives to the treasurer’s plan. The amendment moves up the deadlines for a final report from April 1, 2020, to Dec. 15, 2019, and to implement final recommendations from Dec. 31, 2021, to Dec. 31 of next year.

The bill passed Tuesday on a 26-2 vote. Its next stop is the House Insurance Committee.

The N.C. Healthcare Association, representing hospitals and health systems, and Folwell have clashed bitterly on the issue.

Rep. Cynthia Ball, D-Wake, offered the amendment moving up the study committee’s deadlines. She said reform is urgently needed, but the health-care system couldn’t handle rushing Folwell’s plan into place while statewide Medicaid transformation and other changes are happening.

Folwell thinks a study bill is little more than an attempt to crush his reforms. Delay will add $1 billion to the State Health Plan’s near-term unfunded liabilities, according to actuarial analyses.

“I didn’t lose anything today. The taxpayers lost because every dollar that’s unnecessarily spent on health care is a dollar that cannot be spent on public safety, public education, or public roads,” Folwell told Carolina Journal after the meeting. He said H.B. 184 would decrease transparency, increase costs, and allow providers to dictate the state’s cost structure.

Backers of H.B. 184 say cutting payments would jeopardize rural hospitals’ survival. Folwell’s critics also say more than 720,000 state employees and retirees might have trouble finding quality health care.

“I know this one’s been tough. The personal attacks that you all have faced have not been pleasant,” said Rep. Josh Dobson, R-McDowell, one of four primary sponsors. He said he, too, has been the subject of criticism, and hopes for more civility and cooperation when stakeholder organizations study options.

Rep. Donna White, R-Johnston, a committee chairwoman, said she appreciates the positive reforms Folwell has championed in other areas of state government.

“But we cannot fix this problem of health care with a shock-and-awe kind of model. We have to take baby steps, and we have to work collaboratively,” said White, a retired nurse and former state employee.

Rep. Phil Shepard, R-Onslow, opposes the bill. He said constituent feedback is 2-1 against it.

“There’s a lot of unanswered questions for me and a lot of my constituents,” Shepard said. They want a thorough analysis of both sides’ claims.

The State Employees Association of North Carolina supports Folwell’s efforts. The organization contends hospitals and other providers have milked the State Health Plan for years by overcharging its members to pay for the health care costs of others.

SEANC spokeswoman Ardis Watkins doesn’t think hospitals are going to suffer despite their claims.

“There’s the facade that nonprofit hospitals operate on a shoestring budget, and that every dollar that comes in for care is spent on care and reinvested in that community,” Watkins said. “The dark truth is that this razor thin margin they speak of is often the result of hiding their profits in offshore insurance plans and investments overseas, venture capital firms, ACOs, and for-profit telemedicine and software programs.”

Some critics say SEANC wants to impose a government-run health-care system.

“Since when does expecting transparency and accountability in how taxpayer money is spent make someone a socialist?” Watkins asked. “It seems like the most traditionally American thing there is to demand that our government not be irresponsible with tax dollars or support monopolies that hurt the working people of this country.”

Rep. Donny Lambeth, R-Forsyth, a committee chairman and H.B. 184 sponsor, said when he came to Raleigh he warned then-House Speaker Thom Tillis the trend lines suggested the State Health Plan could become insolvent.

“And that’s actually where we are seven years later,” Lambeth said, but Folwell’s plan is not the solution.

“All we’ll see in this plan is a short-term fix to reduce rates, and we have to fundamentally change the model,” Lambeth said.

He prefers a change like the statewide Medicaid transformation. The plan, starting Nov. 1, shifts payment risk to providers instead of the state. Doctors and hospitals would get a set amount per month to address a patient’s health care needs. Providers, rather than taxpayers, would have to cover any extra costs.

Editor’s note: This story was edited after original publication to correct the effective dates of several aspects of H.B. 184.