Higher premiums, the end of the current PPO 70/30 premium-free option, increased wellness surcharges and new wellness activities.

Those were the plan changes for 2016 recommended by State Treasurer Janet Cowell’s staff to the State Health Plan Board of Trustees at the board’s meeting last week.

After a year with no premium increases in 2015 thanks to the punitive surcharges being paid by members, the staff recommended a number of changes going forward for active employees and non-Medicare retirees.

Here are the highlights of the proposed changes broken down by plan option.

Consumer-Directed Health Plan (CDHP) with HRA

• Add a premium surcharge of $40
• Allow healthy activity credits to reduce premium to $0
• Increase state HRA contributions from $500 to $600 for individuals and $1,800 for families
• Increase member out-of-pocket expenses from $3,000 for individuals and $9,000 for families, to $3,500 for individuals and $10,500 for families

Enhanced 80/20 Plan

• Double premium surcharges from $40 per month to $80 or more per month
• Allow premium surcharge credits to reduce premium to $15
• Possibly add new wellness requirements, which may or may not include one or more biometric screenings such as blood glucose, blood pressure, cholesterol and possibly BMI (body mass index)
• Increase Tier 5 (non-preferred specialty medications) pharmacy co-insurance max from $125 per month to $132 per month

Traditional 70/30 Plan

• Establish a $60 premium (active employees)
• Allow premium surcharge credit to reduce premium to $20 (active)
• Establish premium surcharge credit – tobacco attestation (active)
• Increase generic drug co-pay from $12 to $15 per prescription (active/retiree)
• Increase co-pays, deductibles, co-insurance max & pharmacy out-of-pocket max (active/retiree)

The goal, Cowell’s staff told the board, is to encourage people to move from the Traditional 70/30 plan to either the Enhanced 80/20 or the Consumer-Directed Health Plan, because ultimately, they explained, those are the highest value plans for most people. That means, they continued, that not only will they save the Health Plan money, but they also will save the members money in the long run.

However, for those Medicare retirees on the PPO 70/30 plan, the pain would be more significant. While Medicare retirees would not pay the premiums or be subject to the healthy activity requirement, the 25 percent increase per generic drug, coupled with the increased deductibles and co-pays will force many into Medicare Advantage plans, even if they have Tri-Care or other retiree health insurance benefits.

But while the board largely agreed with the goal of showing people that the 80/20 or the CDHP are usually their best options, several trustees voiced concerns about how that was being done. The problem, they said, is that rather than educating and encouraging people to move to the better plans, the SHP is trying to force them into the decision through the premium hikes – just like the punitive surcharges are trying to coerce people into healthier lifestyle choices.

Board trustee and SEANC member Charles Johnson spoke out against the idea of using premiums to force people to change and about the need to maintain a premium-free option for those employees who can’t afford the monthly fees.

“If the plan is making money, then I don’t see how you justify raising costs,” he said. “The only way we can make that [the advantage of changing plans] clear to them is by charging them more money?”

And while all state employees and non-Medicare retirees will feel the burden of higher costs, Johnson said, it’s those people who have traditionally relied on the 70/30 plan who will feel it the most.

“Those are our new employees, the ones at the bottom of the pay scale,” he said. “This is their plan. It’s their benefits. By working for the state, they’re entitled to it. It has to be affordable.”

During the public comment period, SEANC lobbyist health care expert Chuck Stone explained that North Carolina already spends less per employee than other states and that to shift even higher costs onto the members would hurt employees.

Stone also brought up a concern that was little discussed by board members but was mentioned by every speaker during the public comment period – the extremely high cost of dependent coverage. Stone even pointed to the SHP’s own recent comparative study of state health plans that found North Carolina ranking last in affordability of total family coverage.

During his presentation, Stone urged the SHP board to:

• Maintain the premium-free 70/30 option (one of SEANC’s top 10 legislative objectives as voted on by members)
• Eliminate or reduce premium surcharges
• Reduce generic drug co-pays to ensure medication adherence
• Recommend the General Assembly appropriate funds to provide at least a 50 percent dependent premiums
• Link increases in premiums, premium surcharges and any other expense to the percentage of pay raise
• Seek congressional support to provide premium tax credits in the Affordable Care Act health benefit exchanges for dependents

“The State Health Plan proposals do nothing to address cost-saving opportunities, which could save hundreds of millions of dollars, such as reducing overpayments for outpatient hospital procedures found by Segal Company, the Health Plan’s own consultants,” Stone said afterward. “Instead, it continues to shift costs to state employees and does nothing to make dependent care more affordable for state employees’ families – again, despite the fact that its own report shows that North Carolina spends less per member than other states and ranks dead last in family coverage.

“The governor and the General Assembly should demand to know why.”

The SHP Board of Trustees will vote on the proposed 2016 changes on Feb. 11 and SEANC will continue its efforts to advocate for state employees and retirees.

For the complete recommendation presentation, click here.

For a summary of proposed benefit design changes, click here.

For a more detailed look at the proposed plan changes, click here.