House, Senate at odds over health plan

The last big battle between the House and Senate this session may be how to bail out the N.C. State Health Plan.

The House passed legislation Thursday that would provide $100 million from the state's rainy-day fund to cover deficits in the plan, which legislative leaders say could be steep by early next year.

But Senate leaders say they are considering raising co-payments or deductibles for about 650,000 teachers, state employees, retirees and their family members to cover deficits. They are expected to take up the House legislation today on what is expected to be the final day of the legislative session.

"I'm sorry that we have to be tweaking this right now, but we have to be prudent so we don't crash the system," said state Sen. Linda Garrou, a Winston-Salem Democrat and chief budget writer.

House leaders say they don't want to hit those on the plan with an increase at a time when gas and food prices are rising.

"It seems to me that this is the only choice among difficult choices," said Rep. Dan Blue, a Raleigh Democrat, after the House rolled out its plan.

The House passed it by a 107-3 vote after turning back an effort by Republicans to cover the shortfall with an across-the-board 1 percent cut in the state budget.

What caused the problem is unclear, but it led to the abrupt firing of the plan's executive administrator, George C. Stokes, this month. Legislative leaders say Stokes did not warn them soon enough that the plan was headed into the red. It was projected to have a surplus of about $50 million but is now expected to have more than a $65 million deficit.

Stokes has disputed the claim. He has said in statements that the plan is not in trouble, that lawmakers have confused typical fluctuations in revenues and expenses with a deepening deficit.

Officials with the State Employees Association of North Carolina have sided with Stokes, but they said that if lawmakers think they need to boost the fund to keep it afloat, they shouldn't make employees and retirees pay for it.

House Majority Leader Hugh Holliman, a Lexington Democrat, said the House legislation staves off having to hit up employees now. But if the plan's finances don't stabilize by early next year, employees would likely see insurance increases, he said.

The legislation also steps up reporting of the plan's finances to lawmakers.