RALEIGH -- North Carolina's state health plan costs less than its counterparts in three neighboring states, according to a consultant's report released Thursday, even though the plan has required bailouts from the legislature in recent years.
The analysis by Aon Consulting concluded that the North Carolina had the lowest claims costs per member per month when compared with Georgia, Tennessee and Virginia.
North Carolina also is the only plan among the four that does not charge a premium to active members: more than 600,000 state employees, retirees and teachers. And only North Carolina includes community college and university employees in its plan.
The other three states, however, subsidize coverage for dependents, and North Carolina does not.
The Aon report, presented to a special task force on the health plan, said the plan's lower cost could be a result of several factors, including: better contracted rates, greater use of providers within the plan's network and fewer health risks and better health management among members.
Rep. Hugh Holliman, a Lexington Democrat and task force member, said even though the health plan compares well against other states, costs continue to rise at nearly double-digit rates. The plan cost $2.6 billion to operate last year and is expected to cost a little less this year. State officials expect to have to pump $500 million beyond what members pay into the plan between July 2011 and June 2013.
"We just can't keep the costs going that way and the state picking up the tab," Holliman said.
The report also shows that the plan needs to reduce the price of covering members' children, Holliman said. Only about a quarter of the members in North Carolina's plan also insure their dependents, compared to about half of the members in other states, according to the Aon report. Members are choosing to go elsewhere to insure their children. That's significant because children are younger and healthier than adults, so they help bring average costs down.
Holliman said lawmakers want to bring down the price for covering children and get more dependents in the plan.
"But [other states] charge their employees a portion of the premium and we do not," he said. "So you have to look at the whole picture."
Erica Baldwin, spokeswoman for the State Employees Association of North Carolina, seconded the need to stop pricing out dependents. SEANC also has consistently criticized the plan's contract with Blue Cross and Blue Shield of North Carolina to run the plan, claiming that the contracts hide administrative costs and seemingly frivolous expenses by the insurer.
"If North Carolina is lower [in cost] than other states," Baldwin said, "how much lower could we be if we weren't supplementing Blue Cross' CEO bonuses, sponsorships and buffets?"
Holliman said if Blue Cross' $100 million-a-year fee was cut in half, it would do little to address cost increases that are four or five times that amount.
