Oh, yes, she did.

Governor Bev Perdue made a late-afternoon announcement today that she’s taking over the state’s $787M “rainy-day” reserve fund. 

Can she do that?  I don’t know, but she did.  Her legal staff says the governor has a constitutional mandate to do whatever’s necessary in the case of a budget emergency, which she’s already proclaimed.

The rainy day fund is a budget item created and controlled by the legislature, where reactions among her fellow Democrats were mixed, to put it mildly. 

Senate Pro tem Marc Basnight says he supports the move, given the state’s dire financial condition.  (In case you missed it, we’re so broke we’re falling behind on our bills, including tax refunds.)  He said in a conference call today he’d actually recommended she take that action.

House Dems were a LOT less enthusiastic. Speaker Joe Hackney said he had no forewarning about the Gov’s action, but even if he had, he’d have opposed it. He concedes the constitutional mandate may allow her to seize the fund, but he’s not convinced it gives her the power to spend it while the legislature is in session: “You know, we’re not potted plants here.” 

House Majority Leader Hugh Holliman echoed the sentiment. “The Governor IS the chief budget officer when we’re not in session.  But we’re here.  It’s not like we’ve gone anywhere.”

Perdue says she’ll use $250M – about a third of the fund – to bailout the state health plan.  The state Senate was already headed in that direction, but there were some complications on the horizon.

All together now

Senate leaders have called a Committee of the Whole meeting tomorrow morning at 9 to hammer out concerns about S287, the State Health Plan bailout and reform bill.  It sailed through Senate Approps this morning, but apparently ran off the rails on its way to the floor this afternoon.

A Committee of the Whole is a pretty rare thing.  Normally, when Senate Dems have concerns about a bill, they work it out in caucus behind closed doors.  The fact they’re doing it in public this time tells you that either a) some Dems want more public access to this discussion before they agree to vote yes, or b) some Dems have already said they won’t back the bill, so the leadership is courting GOP votes.  Or it could be c, all of the above.

So what’s not to like about the State Health Plan reform bill?  Gee, where to start? Small pharmacists say they’ll be driven out of business by a provision requiring members to buy their maintenance meds (for diabetes, high blood pressure, etc.) three months at a time from mail-order suppliers.  Oh, and if you’re on a fixed income and can’t pay for three months at once, sorry, but there's a penalty for ordering less.

Then there’s out-of-pocket costs.  Health plan oversight chairs Hugh Holliman and Sen. Maj. Leader Tony Rand like to point out the reform proposal doesn't charge enrolled employees any premium.  They’re less eager to talk about the steep ($1000+) increases in co-pays and deductibles that make this plan a bottom-line loser for most workers.  (Full disclosure, I’m one of them.) If you could choose between a $10/month premium or an extra $1000/year deductible, which would you say is a better deal?  (I'm no math whiz, but even I can figure that one out.) 

Co-pays, pharmacy, and inpatient fees will all rise 30% across the board, too. Supporters of the bill say healthy people won’t see any increase. But it’ll dissuade less-healthy employees from seeking preventive care before illnesses get serious and expensive. Isn't that counter-productive?

Even if employees won’t be asked for any contribution for their own policies, they’ll be paying through the nose for dependents. The Senate bill increases dependent premiums 16 percent, or $900 a year, by 2011 – a lot more if any covered family member smokes or is obese.   With a couple grand at stake, you have to wonder how many families will opt to drop one obese member or smoker to keep costs down.  And if that uninsured former member shows up at the ER with an acute illness, it's a safe bet it'll cost the state a lot more than affordable primary care would’ve.

Blamestorming

When you ask Senate supporters why they’re backing this bill, most say they don't like it much, but they have no choice – health care costs are just skyrocketing, and one of these days we need to figure out why, they say, but for now we need to stabilize the system, and we don’t know where else to look for the money.  The health plan needs hundreds of  millions more to stay afloat, and this isn't a year where that sort of cash is easy to find.

Critics of the proposal say lawmakers are carefully not looking at the terms of their own contract with Blue Cross Blue Shield NC.  But the rest of the state is plenty interested.  Recent news reports show Blue Cross collects about 10 bucks per state claim, which is about 18 times more than it costs to process a Medicaid claim.  BCBSNC says it provides more services than Medicaid. But how do you quantify 18 times more services, especially when the public can’t see the contract its own tax dollars are underwriting?  (The contract is sealed because it contains proprietary info about prices the plan has negotiatied with doctors and providers.)

Another comparison:  As of Jan 2009, the gross median salary for a state worker is about $41,500. Premiums for one dependent on the state health plan costs are $461, or about a sixth of the monthly paycheck after taxes.  The proposed increase of $75/month by 2011 would boost that percentage to about one-fifth of the monthly median take-home -- for one dependent, a spouse.  Meantime, critics of Blue Cross point out that the non-profit paid its CEO about 4 million dollars in 2008 – an annual compensation increase of around $700,000.  

BCBSNC says it’s unfair to imply a causal relation between rate increases and CEO pay.  The state is only one of the insurer’s clients, and a spokesman says the company makes a profit of less than 1% per claim on the state’s PPO plan.  But the public won’t be allowed to see the math behind those figures till the state’s BCBSNC contract ends in 2013 – unless, of course, everyone agrees to open the books. 

In the meantime, the State Auditor’s office is reportedly carrying out its own assessment of the State Health Plan, though there’s no word yet on whether its findings will be publicized.

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