News: Quick Takes

Treasurer renegotiating State Health Plan contracts

Folwell says to expect savings from new deals with United HealthCare, BCBSNC

(CJ file photol)
(CJ file photol)

The number of state employees and retirees purchasing Medicare Advantage plans might rise from 111,000 to 130,000 in the coming year, but they are facing as much as a 26 percent increase in their premiums.

That was the message from state Treasurer Dale Folwell on Tuesday during his monthly “Ask Me Anything” teleconference series with reporters. A theme running through the question-and-answer session was finding ways to write contracts and find savings to bolster a State Health Plan with $42 billion in unfunded liabilities.

A moratorium for 2017 had been placed on the Health Insurance Provider Fee. The fee was assessed on employers providing health insurance. North Carolina’s private, self-insured State Health Plan had been subject to that fee. According to Folwell, the moratorium is being lifted for 2018.

“We would actually be reporting to you sometime in the next four weeks year-over-year reductions in health care premiums for our Medicare Advantage people” as a result of renegotiating the contract with United HealthCare, Folwell said. “We will not be able to do that as long as this health insurance fee is not dealt with in Congress.”

He plans to renegotiate the largest contract in the State Health Plan with Blue Cross and Blue Shield of North Carolina using the same strategy he employed with United HealthCare: Using the plan’s sheer size — it’s North Carolina’s largest purchaser of health care — as leverage.


The Treasurer’s Office has released a request for proposals to administer the State Health Plan in the upcoming year. The contract bids should be evaluated soon. “There will be a lot more insight as to what we expect” about costs in the next month or two, Folwell said.

Folwell was not prepared to discuss what changes might be included in a new contract that might induce more families to join the plan, or whether that might affect other participants. But he pledged that the contract would end years of the state accepting subpar deals.

“That’s what I’m finding throughout the state Treasurer’s Office, that in many instances we’ve signed other people’s contracts, they haven’t signed ours,” Folwell said.

Folwell said state employees or retirees between the ages 50 and 65 but not yet entitled to Medicare enrollment cost the state the most in medical benefits. Those costs are higher due to conditions such as chronic obstructive pulmonary disease, coronary artery disease, and diabetes.

His office is moving forward with an enrollment audit to ensure those receiving medical benefits are eligible for them.

“This is a serious matter,” Folwell said, because it could involve tens if not hundreds of millions of dollars in payouts over a long period of time to people who are not entitled to receive them.

The national average of ineligible health plan participants is 5 percent, he said. In a 2011 audit then Treasurer Janet Cowell found at least 2,000 people receiving benefits who were not entitled to them.

Folwell said in hiring Dee Jones earlier this month as the executive director of the State Health Plan he hopes younger state employees can afford to participate in family coverage plans that are now too expensive.

He also expects her to strengthen accountability for taxpayers. She previously was chief operating officer for the divisions of health benefits and medical assistance at the state Department of Health and Human Services, and COO for the state Department of Administration. In those roles she was charged with finding efficiencies and developing effective practices.

UPDATE: Based on information received from the treasurer’s office after publication, this story was updated to correct the employment background of Dee Jones and to report that the treasurer has not received bids as he indicated.