Opinion

NC Health Plan changes will cut hospital bills

North Carolina Treasurer Dale Folwell’s office kicked 600 people off the State Health Plan, he announced on Wednesday, April 11, 2018, after an audit found people were wrongfully listed as dependents for health insurance coverage.
North Carolina Treasurer Dale Folwell’s office kicked 600 people off the State Health Plan, he announced on Wednesday, April 11, 2018, after an audit found people were wrongfully listed as dependents for health insurance coverage. TNS

Everyone has been there – you are sick or hurt and need medical attention. When you go to the emergency room or other medical provider, a form is stuck in front of you and you are told to sign it before you can see a doctor. You don’t feel well so you sign it because all you care about is getting treatment.

A couple of months later you get a bill and an Explanation of Benefits. The bill is huge and the Explanation of Benefits doesn’t explain anything and is of no benefit. You are stunned. You received great treatment from the health care professionals, but how could it cost so much? What are all of these facility fees? How am I going to pay for this?

We Don’t Consume Healthcare, It Consumes Us

The State Health Plan, a division of the N.C. Department of State Treasurer, provides health care coverage to more than 727,000 teachers, troopers, other state employees, and their dependents. It is the largest purchaser of health care in North Carolina.

Taxpayers spend more than $3.3 billion a year on the Plan – more than the state spends on the entire university system or for public safety. Health care costs, on average, have increased seven to nine percent a year while the state’s budget provides only a 4 percent annual increase. At current expenditure rates the Plan will run out of money in 2023. In addition, the Plan’s unfunded liability for retiree healthcare is $32 billion – right behind Illinois. The path we are on is unsustainable.

What Can We Do About It?

In every other purchase you make in your life you know the price and value of what you are consuming. Whether it’s a tank of gas or a cup of coffee, you know what it costs and can decide whether it’s worth it to you. That transparency simply does not exist when purchasing healthcare.

That’s why starting Jan. 1, 2020 the State Health Plan, as a government payer of health care, will move to a pricing model that uses Medicare rates to reimburse providers for their services. The Plan will pay providers Medicare rates plus, on average, a 77 percent profit. In addition, primary care doctors, mental health, and many rural providers will get pay increases.

Using Medicare-referenced pricing is already accepted by medical providers statewide. Right now, they provide care for workers’ compensation and prisoners at Medicare plus a 40 percent profit. We are asking them to provide care to those who teach, protect and serve at an average profit of 77 percent.

These published reimbursement rates will allow consumers to understand the value of what they are purchasing so they can make educated decisions about medical services like they do with everything else in their lives.

Dirty Little Secret

The major opponent, the hospital association, claims that the State Health Plan is not a governmental payer despite the fact that it is totally funded through taxpayers’ dollars and employees’ premiums.

They also don’t want you to know that they cost shift their losses to payers like the Plan. They have also claimed that if we are successful, they will just order more tests on patients to drive up the cost. It is unconscionable.

The Institute of Medicine estimates that 30 percent of all medical spending in the U.S. is wasted. Instead of trying to be more efficient, big hospitals want to continue charging more to systems like the State Health Plan, protecting their profits for years to come. We attack problems, not people, and 30 percent waste is a problem.

We are asking all medical providers to join us in providing transparent, accessible and quality medical services to those who teach your children, protect you from crime and pave your roads. Together, we can lead the nation in pushing power back to the consumer so they can make informed choices when purchasing health care.

Dale R. Folwell, CPA is the State Treasurer of North Carolina.

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