The State Employees Association contends that hospitals and other providers have milked the State Health Plan for years by overcharging its members to pay for the health care costs of others - those who are uninsured. Furthermore, it believes the hospitals are being dishonest about their financial situations. SEANC spokeswoman Ardis Watkins doesn't think hospitals are going to suffer despite their claims. Watkins says: "There's the facade that nonprofit hospitals operate on a shoestring budget, and that every dollar that comes in for care is spent on care and reinvested in that community. The dark truth is that this razor thin margin they speak of is often the result of hiding their profits in offshore insurance plans and investments overseas, venture capital firms, ACOs, and for-profit telemedicine and software programs."
; The State Employees Association of North Carolina supports Folwell's efforts. The organization contends hospitals and other providers have milked the State Health Plan for years by overcharging its members to pay for the health care costs of others.
And so, in the hospitals' decision to frustrate rather than work with the Treasurer, House Bill 184 (HB-184) was born.
CCTA - HB184 (why it will cost NC)
B. HOUSE BILL 184 (HB-184): "Study State Health Plan Design"
House Bill 184 (HB-184) has as its primary sponsors Reps. Josh Dobson (R-Avery, McDowell, Mitchell), Julia Howard (R-Davie, Rowan), William Brisson (R-Bladen, Sampson), and Gale Adcock (D-Wake). Harry Warren (R-Rowan) was a co-sponsor, and Rep. Greg Murphy (R-Pitt) not only voted to move the bill out of the Health Committee but also voted YES on the House floor. Rep. Donna McDowell White (R-Johnson) was also among the 75 who ultimately voted to pass the bill when it came to a House vote. I mention these representatives for a reason.
HB-184 is legislation essentially crafted by the hospital lobbyists that derails the reform process of the State Health Plan (SHP) and adds up to a billion in unnecessary financial liabilities. Officially titled "Study State Health Plan Design," the bill deceptively purports to be a "study" bill. The reality is that it is a "stalling" bill, allowing the hospitals to enjoy its current status vis-à-vis the State Health Plan until the 2020 election.
The result of HB-184, as Treasurer Folwell and almost all conservative think-tanks and policy experts agree, would be to would force taxpayers, state agencies, and government employees to pay more to cover higher insurance costs.
The bill has two sections. The first section creates and authorizes the Joint Legislative Study Committee on the Sustainability of the North Carolina State Health Plan to consider how the Plan (the SHP) can be restructured to promote long-term financial health. Clearly, reform is needed: If it continues its current path, the State Health Plan will be unable to pay its debts (ie, "liabilities") as soon as 2023, which is only four short years away. This insolvency would be catastrophic to the state budget.
Section 1(b) dictates how the Study Committee will be comprised. The Committee is to be comprised of the following 'voting' members: four members of the House of Representatives (appointed by the Speaker of the House, who happens to be pro-hospital and against the taxpayer); four members of the Senate (appointed by the President Pro Tempore); the Executive Administrator of the State Health Plan; one member appointed by the North Carolina Medical Society; one member appointed by the North Carolina Healthcare Association; one member appointed by the North Carolina Nurses Association; one member appointed by the State Employees Association of North Carolina; one member appointed by the Retired Government Employees Association of North Carolina; one member appointed by the North Carolina Association of Educators; and one member appointed by the North Carolina Psychiatry Association. The Committee will also include the State Treasurer (Folwell) but he is only an ex officio and has no vote. If it chooses, the Committee may increase its voting membership in any way it thinks best.
Section 2 of the bill prevents the Treasurer and the Board of Trustees for the State Health Plan from making any changes to the provider network or reimbursement rate fee schedule until December 31, 2020. In other words, this section mandates that the current arrangement with third party administrator Blue Cross and Blue Shield of North Carolina continues (unchanged) until that date. This prohibition extends 8 months after the study is concluded, and a full two years into the four-year timeline for the plan's financial ruin.
Why is the date
"December 31, 2020" important? Because that date is after the November election and will give the healthcare lobbyists the chance to get Folwell out of office This bill would block any reforms until the start of 2021, when there may be a new Treasurer - one more aligned with the hospitals and healthcare services.
As you will see below, Rep. Michael Speciale attempted to remove Section 2, but was countered by the bills' sponsors, explaining that to do so would
"gut the bill completely." So we see the real purpose of the bill.... It's not really a "study" bill after all. It's really a stall tactic to maintain the status quo until after the 2020 election, when there may be a new Treasurer. Section 2, together with Section 1(b), is nothing more than a political hit on the office of the State Treasurer.
It should be noted that the actuarial note for the bill estimates that the prohibition on changes will add an additional $1 billion to the state's $33 billion unfunded liability. Therefore, in addition to delaying a solution to the problem, the bill would add to the state's liability, and cost by half a billion over the next three years.
As mentioned above, the State Employees Association of North Carolina (SEANC) is the group that will be most directly affected by any change to the State Health Plan. They put their faith in Dale Folwell. This is what the SEANC says about HB-184:
"The legislators [in the NC House] will vote on HB-184 - a bad bill that will cost taxpayers and the State Health Plan members more than $1 million per day if it is enacted. HB-184 was written at the behest of hospital lobbyists to stop Treasurer Dale Folwell from moving forward with SEANC-supported reforms to the State Health Plan. Our initiative - the Clear Pricing Project - will save Plan members $57 million every year in reduced out-of-pocket expenses. It will also save taxpayers more than $258 million annually. Hospitals want to delay these important reforms, and HB-184 would block Treasurer Folwell from implementing the Clear Pricing Project in 2020. Even though the State Health Plan Board of Trustees unanimously approved the Clear Pricing Project last year, hospitals want the General Assembly to 'study' the issue for two years. That's code for 'let the hospitals keep overcharging for care while we prevent the Treasurer from doing the job he was elected to do.'"
To summarize, HB-184 is a very bad bill. It is bad for state employees and retirees, and bad for North Carolina taxpayers. On the other hand, it is good for the hospitals, good for doctors and nurses, and good for state legislators who are in bed with the hospitals and their lobbyists.
This brings us to the conflicts of interest that surround this bill.
Primary sponsors of HB184 received notable political contributions from the North Carolina Healthcare Association in 2018: Rep. Josh Dobson (R-McDowell County) received $5,200, Rep. Julia Howard (R-Davie County) received $2,000, Rep. William Brisson (R-Bladen County) received $3,000, and Rep. Gale Adcock (D-Wake County) received $6,200. Partnership for Innovation in Healthcare publicly thanked them for sponsoring the bill. Oh, you've never heard of this group, Partnership for Innovation in Healthcare? Don't feel bad... neither did anyone else. With all the new attention given to the State Health Plan and Folwell's plans to reform it, a new special interest group arrived on Jones Street to peddle influence.... Yep, you got it - the Partnership for Innovation in Health Care (PIHC).
But that's not all. Several legislators probably should have recused themselves from the vote, being incapable of not giving too much weight to the hospital's interests. Among such conflicts, these are the more notable ones: Rep Josh Dobson's wife works at a hospital, Rep. Greg Murphy does his surgeries at Vidant, Reps. Harry Warren and Gale Adcock work at a hospital, and Rep. Donna McDowell White worked in Home Heath.
The Civitas Institute has done some further digging into the conflicts and into the political incentives that may have helped legislators decide to support HB-184. According to an article written by Civitas president Donald Bryson on Friday, April 5 ("State Health Plan Fight: Follow the Money, Part 2"), the critical question to ask is this: Who is the Partnership for Innovation in Health Care?
Bryon writes in that article:
A glance at the group's website shows a post office box in Cary: Post Office Box 4449, Cary, NC 27519.
A bit of rummaging at the Federal Election Commission and the State Board of Elections reveals that this is the same post office box used by both the North Carolina Healthcare Association (formerly known as the North Carolina Hospital Association) and the North Carolina Hospital Association Political Action Committee (PAC). It seems that the hospital lobby has very close ties to Partnership for Innovation in Health Care (PIHC).
Bryson then asks the question: "Since PIHC and the North Carolina Hospital Association PAC share a post office box, is there a correlation between legislators that have sponsored HB-184 and political contributions made by the PAC?"
He concludes that there is.
Bryson continues in his article:
According to records from the North Carolina State Board of Elections, of the four primary sponsors on HB184, all four received contributions from the North Carolina Hospital Association PAC. The maximum contribution for state legislative races in 2018 was $5,200 per election. Of the four primary sponsors, which are listed below, two received maximum contributions while the average contribution for the primary sponsors was $3,280.
