As many as 150,000 retired state workers will save a little money this year on health care costs, officials said Wednesday when they announced changes to a benefits plan for older retirees.
The state government also stands to save thousands of dollars on the deal, which N.C. Treasurer Dale Folwell said will slightly decrease premiums in the state’s Medicare Advantage plan.
Last year, the state paid $120.65 a month for each of those 150,000 retirees on the Medicare plan. This year, that will drop to $120 a month. That equates to savings of around $1.2 million.
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The changes will mostly help the state budget, since retirees on this plan don’t pay for their own health care costs. But Folwell said retirees with dependents on their plan do pay, and so their bills will be a little smaller.
But Folwell painted the small drop as a big victory, saying that health insurance premiums have been on the rise in general – and that before renegotiating this contract, it was possible that premiums could have actually risen as much as 25 percent.
“Across North Carolina, people's insurance rates are going up,” Folwell said. “Dramatically, in some cases. ... To be able to hold those premiums level, given the headwinds we were facing financially, I think was a Herculean effort.”
The advocacy group for state employees and retirees, SEANC, welcomed the news.
“They managed to maintain the benefits without increasing premiums,” SEANC Operations Director Chuck Stone said.
And both Stone and Folwell urged people to take action on one more item – calling North Carolina’s members of U.S. Congress to ask for something called a “health insurance provider fee” to either be repealed or have its moratorium continued.
That fee is part of the Affordable Care Act. It requires health insurance companies to help subsidize the individual markets that Obamacare lets people use to buy health insurance.
Instead of allowing that fee to cut into profits, insurance companies passed the costs on to their customers in the form of higher premiums. Last year, the fee was anticipated to bring in about $11.3 billion before being blocked from going into effect, according to the American Academy of Actuaries. But the fee is set to be un-blocked next year, and both Folwell and Stone said people should ask Congress not to allow that to happen.
Stone said it’s an example of an intelligent way to tweak Obamacare – as opposed to “this loud debate and noise in the background regarding ‘repeal and replace’” in Washington, D.C., he said.
It’s unclear how much that would help the state budget or health insurance customers. Folwell said premiums could rise 25 percent next year if the fee goes back into effect, although the American Academy of Actuaries said premiums dropped only 1 to 3 percent last year when the fee was blocked.
Another goal of Folwell’s is to get more eligible state retirees to switch from regular Medicare to the state’s Medicare plan that they’re eligible for once they turn 65.
Having more retirees enrolled will give the state more leverage in future negotiations like the one announced Wednesday, and Fowell said he thinks it’s easier to navigate than the regular Medicare program.
“Our loyalty is to the participants in these plans,” he said.
Doran: 919-836-2858; Twitter: @will_doran