This plan could save money for state workers and taxpayers, but it has few defenders in NC House

A plan that could save state employees and taxpayers money, to the detriment of North Carolina hospitals, ran into opposition Tuesday at the General Assembly.

More than 700,000 North Carolinians are insured through the State Health Plan, and the plan’s board of directors recently approved a major change to the system regarding how hospitals would be reimbursed when those people seek medical care.

Those changes are set to go into place next year, although the legislature can still step in to stop them. That process began Tuesday, when a key committee approved House Bill 184.

Hospital groups like the N.C. Healthcare Association say the changes would cost them hundreds of millions of dollars a year. Stephen Lawler, the NCHA president, previously told The News & Observer that rural hospitals would be particularly hard-hit.

So the NCHA and other industry groups have strongly opposed the changes. The bill approved Tuesday by the health care committee in the House of Representatives would stop the changes from happening as planned and would instead form a new committee to study other ways forward.

“My hope is, with all the stakeholders at the table ... that we’ll come up with the solution that’s best for North Carolina,” said Republican Rep. Josh Dobson of McDowell County, who proposed the study committee bill.

The bill now has to pass two more House committees, the insurance and rules committees, before it can be voted on by the House as a whole. If it passes the House, it’ll go to the Senate for more deliberations.

The study committee would look into ideas for reform that could gain approval from both the hospitals and the backers of the proposed changes — which include the State Employees Association of North Carolina as well as N.C. Treasurer Dale Folwell, a Republican who has made reforming the State Health Plan a main goal. He says it’s dangerously underfunded, partly because hospitals are not transparent with the state regarding their billing practices.

“I didn’t lose today,” Folwell said after the committee passed the study committee bill. “The taxpayers lost.”

Multiple committee members said they were initially torn on which way to vote. But after Democratic Rep. Cynthia Ball successfully proposed changing the bill to give SEANC a second seat on the study committee, and to speed up the timeline for the committee’s report, the vote was nearly unanimous.

Robert Broome, SEANC’s executive director, said he didn’t ask for that change and continues to oppose anything that will stop the State Health Plan changes, which are officially called the Clear Pricing Project, from happening.

“Health care costs are out of control,” Broome said. “Dependent care coverage is unaffordable for tens of thousands of state employees, retirees and teachers. And what we’re trying to do through the Clear Pricing Project is change the status quo.”

After the meeting, Folwell pointed to a fiscal report by nonpartisan legislative staffers. It found that if the current system remains in place, the state’s unfunded liability — debt that it lacks the funds to pay off — would take on another $1.1 billion.

“We are on an unsustainable course,” Folwell said. “The price of doing nothing is over a billion dollars.”

Republican Rep. Donna White of Johnston County, who is a nurse, said she understands the desire to reform the system and praised Folwell. But she voted for the study committee and for stopping the changes Folwell is pushing for.

White said North Carolina is currently changing several other facets of the health care system, most notably the privatization of Medicaid, and she thinks the proposed State Health Plan reform would be too big of a jolt to the system.

“Today we cannot fix health care with a shock-and-awe type model,” she said.

Republican Rep. Donny Lambeth, the former head of North Carolina Baptist Hospital in Winston-Salem, said the State Health Plan does need to be reformed. But he said it needs to be more comprehensive than what’s been proposed, and he hopes the study committee is able to find such a solution.

“Otherwise we’re just going to put a Band-Aid on that problem and kick the can down the road,” Lambeth said.

This story was originally published March 26, 2019 at 4:29 PM with the headline "This plan could save money for state workers and taxpayers, but it has few defenders in NC House."