Newsflash! Taxpayers Pay for State Employee and Teacher Benefits | Eastern North Carolina Now

    Publisher's note: The author of this post is Joseph Coletti, who is Senior Fellow for the John Locke Foundation.

    An angry teacher on Facebook wondered why those in charge of the State Health Plan "felt the need...to remind us that we are funded by taxpayers" on the new insurance ID cards. Worse, a letter from Health Plan officials made it clear that only the barest minimum has been set aside to pay future health care costs for retired state employees.

    First, teachers were not the only ones who received the new card and letter explaining the changes. Every teacher and state employee enrolled in the State Health Plan would have been notified. State Treasurer Dale Folwell wants to make sure that state employees understand the value of their state-provided benefits, particularly their pensions and health insurance, that can add 50 percent to their total compensation.

    For years, Blue Cross and Blue Shield of North Carolina has been featured on health insurance cards for teachers and state employees. That led people to believe Blue Cross provided their health coverage, not the state. Folwell thought the new cards would make clear, "The state pays 82 percent of the cost of your State Health Plan benefit. On average, this is nearly $500 per month per member or more than $3.1 billion per year."

    The new card does this and "highlights the fact that the Plan and taxpayers like you ultimately pay your medical bills - NOT Blue Cross and Blue Shield of North Carolina (Blue Cross NC)." State employees understand the responsibility they have every day as stewards of taxpayers' money. After all, they are taxpayers too. Some of them might give more thought to the cost of their health care if they knew they were not cutting into the profits of one of North Carolina's largest nonprofit organizations but were, instead, taking money from the other good things state government does. And maybe Blue Cross NC got too much credit for taking care of the needs of state employees.

    Regardless of whether state employees change their behavior, legislators have historically not set aside sufficient money to pay for the full cost of health benefits. For years, health insurance payments have covered current obligations, even though employees were promised insurance after they retired. Only in the last dozen years has the State Health Plan taken a backseat to Medicare in paying medical bills for older retirees who were covered by the federal program. A 2017 court decision removed the state's ability to adjust benefits or even charge premiums for existing retirees. As a result of these funding and policy decisions, the unfunded obligation for future retiree health benefits as of June 30, 2017, was at least $38 billion, which is nearly the entire obligation for retirees and more than double the unfunded portion of the state's $100 billion pension obligation.

    Despite the teacher's fears, current State Health Plan enrollees are still promised their health benefits after retirement, but those who begin working for the state after December 31, 2020, will not have state-paid insurance after they retire. Legislators made that change in the 2017 budget bill because the court limited their other options to put a cap on the size of that unfunded obligation.

    Kudos to Folwell and State Health Plan management for identifying the source and highlighting the value of insurance coverage for state employees and teachers, as well as the cost of that coverage. More employers should take similar steps to make clear what they pay for their employees' health insurance. It may not be something employees want to hear, but it is critical information about the compensation they receive for their work.