When Cathy Knight thinks of the state health plan, she thinks of the $427 that gets taken out of her paycheck every month.
That adds up to about $5,130 a year — 15 percent of her salary.
She thinks of the thick manual she received when she signed up for the only health insurance plan she’s ever had.
She tried reading it once but quickly got lost in the terms and numbers.
She thinks of her 17-year-old daughter and her husband, a self-employed brick mason, and says, “I just pay it. It’s better to have something than nothing.”
Knight, a housekeeping administrator for South Campus residence halls at UNC-Chapel Hill, is one of the 560,000 members of the State Health Plan, the only health insurance option that is offered to North Carolina teachers and state employees and their families.
About 36,000 of those people work within the UNC system.
They are educators, maintenance staff, office personnel and hospital workers — and some of them are paying up to one-third of their earnings to keep their families covered.
It doesn’t cost anything for a state employee to be insured under the plan, but the price tag is $178 a month for each child and soars to $427 a month for family coverage.
Those premiums have increased by 17 percent between 2002 and 2003, leaving many employees wondering when the next increase will come and whether or not they will continue being able to afford family coverage.
It is a system with high prices and no options, a system that leaves Knight and many of her fellow employees feeling trapped.
But there are people on all levels of the state health plan’s complex system who know there is a problem and who are working for change.
Last fall, the UNC-system Office of the President commissioned a health care satisfaction survey, which was administered to employees by Hewitt Associates LLC.
Laurie Charest, associate vice chancellor for human resources at UNC-Chapel Hill, said the survey was designed to provide hard evidence for employees’ dissatisfaction with health care benefits so the Office of the President could begin investigating an alternative health plan or “pilot project.”
Of the 12,380 employees who responded, 65 percent were dissatisfied with employee contribution costs, and 74 percent were dissatisfied with out-of-pocket costs.
“For us to get permission to move ahead with the pilot project, we will have to go first to the Board of Governors and then to the legislature for approval,” Charest said.
“So it seemed important for us to have some data to back up whatever our request (will) be.”
Charest is part of a task force commissioned by the Office of the President to research alternative health insurance plans for the pilot project.
She said the task force hopes to design a plan that will subsidize the cost of dependent care, reduce out-of-pocket costs and provide a variety of coverage options.
But she also said the pilot project would have to work within the same limited budget that the General Assembly allots to the State Health Plan every year.
“The idea is that we would use the same amount of money but restructure the program in a way that (would make) people happier with the benefits,” Charest said.
During the Board of Governors’ Budget and Finance Committee meeting in February, a preliminary draft outlining 12 possible objectives for the plan came to light.
A new plan based on these objectives could emerge by 2006 — but its feasibility hinges on the approval of the N.C. General Assembly.
And unless the UNC system’s plan will benefit the state health plan as a whole, the legislature is unlikely to pass it, said N.C. Sen. Tony Rand, chairman of the BOG’s Oversight Committee on the N.C. Teachers and State Employees Health Plan.
“They (shouldn’t) just look at, ‘How can we make a better deal for us?’” said Rand, a Cumberland County Democrat and the Senate majority leader.
“Because in the long term, that will not fly.”
Dr. Jack Walker, executive administrator of the state health plan, said the solution lies not in who delivers health care, but in how it is delivered.
Walker said the management end of a health care plan, which includes issuing user cards and processing claims, accounts for about 2.5 percent of the cost of the plan — so finding a more efficient administrator is likely to have a minimal impact.
The other 97.5 percent of health care costs comes from members’ doctor visits, surgeries and prescription drugs. And these costs are increasing exponentially as the number of chronically ill people rises.
Walker said that in 2003, more than 164,000 members of the state health plan were treated for chronic diseases such as asthma, diabetes, heart disease, arthritis and cancer.
On average, each of these members costs the plan $7,400 a year, whereas a member who does not have a chronic disease costs the plan an average of $800 a year.
This system punishes healthy members, who essentially pay the bills of unhealthy members.
Though a healthy family of four costs the system an average of $3,200 a year, that family pays almost $2,000 more in money that goes to pay for care for the chronically ill.
Since 2000, the percentage of healthy members in the plan has dropped from 64 percent to 58 percent.
Plan administrators predict that another 7 percent of members will be reclassified as unhealthy during the next five years, a switch that Walker estimates will cost $476 million.
“I think it’s a crisis coming to a head very shortly,” Walker said.
A radical solution is needed, Walker said, and it must be one that can shift the responsibility of health care from providers to members.
Focus on health
Walker said that during the next four years, he hopes the state health plan will focus on helping people remain healthy.
A program called North Carolina HealthSmart, which is part of the plan’s budget proposal to the General Assembly this session, might help.
The program will include fitness and dietary programs, smoking cessation programs, medical case management and screenings to identify and track health risks.
Rand said he hopes the General Assembly will take the concept of a wellness benefit even further.
“We are considering making the employee pay part of the premium, but giving them back that money if they will lead a healthy lifestyle,” Rand said.
Rand said this plan would allow employees to earn back part of a mandatory monthly premium by concentrating on improving their own health.
Employees could participate in fitness programs, decrease their cholesterol levels or give up cigarettes to reduce the cost of their health care.
This type of plan would reward healthy members through an incentive system rather than exploit them, Rand said.
“We have to give people an incentive to take better care of themselves, which is a benefit to the employee — but it’s also a benefit to the plan.”
A political push
Even with backing from officials within the UNC-system and with support from current users of the health plan, such a measure would have to survive the political process, Rand cautioned.
To pass, it would need the support of 26 members of the Senate, 61 members of the House and
Gov. Mike Easley.
“Does a collective political will exist to pass that?” Rand asked.
“I don’t know. But if you don’t pass that, the cost (of health care) continues to escalate dramatically.”
If the measure succeeds, Knight and hundreds of thousands of people across North Carolina will find themselves in a very different relationship with their health care provider.
Officials say the only people who can permanently reduce the cost of health care are the plan’s members.
But for that to happen, many people will have to drastically change their lifestyles.
“I think with some people, it doesn’t really matter what you offer — if that’s what they’re used to doing, that’s what they’re going to keep doing,” Knight said.
“But offer it to me? I’ll take you up on it.”
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