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Rep. Dale Folwell: Protect and Reform Our State Health Plan

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Lawmakers got some unexpected news in the final weeks of the session regarding the State Health Plan. They assumed that plan was millions of dollars in surplus, when instead the Health Plan faces a possible quarter-billion dollar deficit. House and Senate Democrats adjourned the Short Session without agreeing on a remedy. The State Health Plan faces a nine figure deficit after the House and Senate could not agree on emergency funding before adjourning last week. The Health Plan is not currently in any deficit, it's just scheduled to enter the red early in 2009- possibly during the next legislative session. That's IF projections hold. Sen. Phil Berger: The 2008-2009 Fiscal Year, we're looking at the State Health Plan running a deficit of somewhere around $250 million. Sen. Tony Rand: The Plan is estimated to be down to a $20 million reserve by December. The Plan spends $10 million a day! So, when you have a $20 million dollar reserve, you have a two day reserve. If it hiccups, we're busted. If we were a commercial plan, we would be insolvent. Reporter: The Republicans say Democratic leaders should have known more- at least suspected more about the State Health Plan's impending deficit before writing and passing a budget, then adjourning. Rep. Dale Folwell: There was a scent of this starting in January when the actuarial report came in about the utilization of the cost... ...a stronger scent in February, and then when the marks report was due and it didn't come in, and then the CFO resigns a few weeks later. There's been a whole snowballing effect going on since January in the State Health Plan. Reporter: Democratic leaders say they used projections given to them by the State Health Plan's Administrators. These projections assume tens of millions of dollars in surplus. Speaker Joe Hackney: Throughout the preparation of the budget, we were told consistently to expect a $50 million positive. So, we were certainly not told anything other than that. Reporter: House Speaker Joe Hackney says State Health Plan administrators are keeping lawmakers abreast on immediate cash flow and up to date projections. That quarter-billion dollar deficit is itself only a projection at this point. Speaker Hackney: I think that it's very manageable. First of all, we don't know the extent of it yet. We're on top of it. We're monitoring it on a weekly basis. And I think the information flow is now excellent, coming from over there to us. Reporter: Republican leaders want state agency budgets trimmed by 1%, saying the newly passed budget bill could have been tweaked, because the new money it's providing to agencies has not been spent yet. Rep. Dale Folwell: That's one penny on a dollar. And when you do a reversion on one penny on the dollar, and you're able to do it this early in the fiscal year, the impact on that is a lot less than it will be if we wait till after the election to deal with this. Reporter: Senate Democrats offered to raise the copayments on nearly all health services provided under the State Health Plan, except generic drug prescriptions. Sen. Tony Rand: It is estimated without this, next year, the premium increase would be somewhere between 32 and 36 percent. Reporter: Without this? Sen. Rand: Without this. Now this will get it down to the 20s, I think. Reporter: The House rejected higher copays, the Senate rejected the House proposal to tap the State's rainy day fund. That would have guaranteed the State Health Plan stay in surplus until the 2009 legislature convenes. The result is a stalemate, means no action was be taken this summer. Speaker Hackney: It isn't likely that they're going to run out of money or anywhere close to it before we get back into session. So, I don't think it's a big problem that we didn't provide a temporary fix. Sen. Phil Berger: Ultimately, the state budget is going to be responsible for funding the Health Plan for the employees. The state as an employer has certain obligations to keep its promises. And so, for the majority party to treat this big a problem in this way is just totally irresponsible. Reporter: Lawmakers say the Governor has discretion to act on the State Health Plan's behalf, if the situation turns worse than projected. A more dire financial turn could also require a special legislative session later this year.

Video Details

Duration: 4 minutes and 32 seconds
Country: United States
Language: English
Views: 151
Posted by: dalefolwell on Jul 31, 2008

UNC-TV's coverage of the unaddressed crisis facing North Carolina's State Health Plan.

Representative Folwell's got the solution.

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