The $300 Million Healthcare Announcement for State Employees

Oct 24, 2018

A new state health plan promises to cut the state's health costs by pegging reimbursements to providers to the rates set by Medicare.
Credit ILO in Asia and the Pacific / Creative Commons

State employees in North Carolina spend a lot of money on healthcare and cost their employer millions. State treasurer Dale Folwell has argued these fees are obscure and out of control. He has called the financial reimbursement model unexplainable, unacceptable, and unsustainable and says the state is at risk of overpaying medical claims since it cannot independently verify it receives the proper contractual discounts. Now his proposal for how to fix it—and save the state $300 million—has been unanimously accepted by the state health plan board. 

Beginning in 2020, reimbursements from the state health plan to providers will be pegged to publicly available amounts used by Medicare. Host Frank Stasio talks with WUNC data reporter Jason deBruyn about the announced change, how hospitals are reacting, and what it means for healthcare consumers and insurance companies. 


On the "black box" of healthcare cost information:

  He made a public information request from UNC Healthcare to get a better explanation of exactly what it is they're paying. UNC Healthcare sent him back a very redacted document. He's been showing that off as often as he can, taking that everywhere showing that this is just a really big black box. But it is! It really is a black box. This negotiated rate between private health insurers and providers is an unknowable number. So it truly is a black box when you're talking about healthcare payments.  "In all likelihood you're going to save money. And that's exactly what he's projecting."

On how this could fracture the whole system: 

This is fascinating because it's not exactly a government payer, but it's not exactly a commercial payer either. Well what's to stop IBM from saying: We're also going to peg to Medicare? What's to stop other major, private employers from saying: Well now we're only going to pay you so much? For years, as we've said, this system has sort of built on itself, and this cost shifting has happened, which is very important to provide care to rural areas. Well if this starts to fracture and ultimately crumble, that really will be a shock to the system. 

"In all likelihood you're going to save money. And that's exactly what he's projecting."