A $23.8 billion taxpayer liability, in two parts
Update(12/8):Click here for Friday's story on this.
We’ll have more on this in Friday’s paper. But the headline is not wrong: the state says it has a $23.8 billion liability for its health plan that is, at this point, unfunded.
Part One: What does this mean
The North Carolina State Health Plan is the branch of state government that provides health insurance for teachers, other public workers and retirees.
Not too long ago, the Government Accounting Standards Board told states that they would have to account for their pending health care liabilities, such as the health plan.
This came as quite the shock to the system, since no one had ever figured out exactly how much the benefits that we promised all those public workers and retirees would cost.
The numbers are in, and I'll upload the report as soon as I can.
Update:
So what does a $23.8 billioin unfunded liability mean? The $23.8 billion figure is a cost calculate out over a matter of decades. No one expects that taxpayers would have to set all that money aside in a matter of one year.
So why is this important? A few reasons:
- Bond rating agencies will look at that liability and may start looking for states to start setting some money aside to meet the anticipated demand. That will be one more strain on a state budget that was looking kind of tight next year anyway.
- Seeing the number in black and white might cause lawmakers to re-evaluate how generous we are to state workers. That in turn would make state workers grumpy and prompt a show down at the General Assembly.
- All governments are going to deal with this. Look for Greensboro, Guilford County and your home town to be calculating this number and then struggling with what it all means.
This is something that government leaders are first going to struggle to understand, and then struggle to figure out exactly what they should do about it.
Update: I’ve chatted with a few of the honorables since posting this.
Sen. Kay Hagan, a Greensboro Democrat, says there are a number of possibilities that have been discussed. Among those, she said, has been asking state employees to contribute some to the health plan, which they don’t do now.
According to the actuary’s report, the state would need to play about $849 million a year to make up the ground that has been lost. Hagan say there’s no way the state would do that much, but it might start setting aside more money to take care of some of the future payments.
And, she said, the state needs to more vigorously pursue a wellness plan for workers. The logic here is that healthier workers will mean fewer health care costs in the future.
“We need to have better nutrition, we need to have better exercise, we need to make our state employees healthier.”
Sen. Phil Berger, an Eden Republican, was also of the opinion that the state needed to set aside more money. He also said the state may consider shifting to a health savings account-type scheme, such as the one pushed by the Locke Foundation.
Berger said that this is a case where the General Assembly is planning short term when it makes its budget deals but should be looking further down the fiscal road.
“A lot of times, the fiscal horizon we’re looking at is two or three years,” he said. “There’s not a practice a looking at something asking what this does to the next generation and we need to start doing that.”
Part two, after the jump.
Part Two: Calling BS
This here is a family blog, so I won’t use the kind of language that our furry friends at the
health plan provoked in the privacy of my own office over the past few days. But suffice to say, I think they were jerking me around illegally. Now, open records laws may not mean much to you, but us scruffy media types tend to take them seriously. Too bad the health plan doesn’t.
Basically, the state health plan is an arm of state government, funded by your tax dollars folks. That means they fall under the state’s open records rules, which say unless they have a good reason they have to share their reports and what not with the folks that pay for them (that would be you and me).
The report we’re writing about here has essentially been done for a few days, they’ve just been shopping it around to various constituencies inside state government to make sure everyone knows what it says. A draft of the report has been around last week and I requested it last week and got bupkis. (Drafts are not exempt from open records requirements, by the by.)
“We’re not hiding anything,” said Lind McCrudden, the flac for the plan. “There are things that we have to do for our own internal protocol.”
I told McCrudden I was pretty sure she and the health plan were breaking the law, to which her response was “I’m sorry you feel that way.”
It ain’t just a feeling. If the law gave “internal protocol” status, I wouldn’t have a complaint. But to believe that, you'd have to believe that the internal office politics of the state health plan trumps a state law.
It doesn’t.
And since I’m writing about the contents of the report above, you could make an argument that there’s no harm...other than a branch of state government seems to feel it can blow off the state’s open records law for their own internal reasons.
Is there a lawsuit here? Probably not one that would do much good. The upshot for me is that pretty much anything the health plan folks tell me today and in the future is going to be viewed with a certain amount of mistrust.
Comments (7)
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Excellent post, Mark. This will make a great story. And I seem to recall that the state made its health plan potentially a good bit more generous for a significant number of members by eliminating previous deductible requirements. So the liability may be in the process of snowballing.
Posted on December 7, 2006 3:27 PM
I second the "excellent post", Joe. Good God, this state is run by a bunch of short-sighted morons.
This makes the "disproportionate share" fiasco look like a child's tea party.
My Mom put in her thirty-some years as a teacher. Can't wait to see what this means for her.
As for the "I told McCrudden I was pretty sure she and the health plan were breaking the law" thing . . . and the "I'm sorry you feel that way" retort of a "public servant" . . . it's a lot like non-profit hospital executives lying under Oath about the confidentiality of their financial records.
Ms McCrudden's response didn't affect your livelihood, but now at least you have an inkling of how I feel.
Not much fun is it?
Posted on December 7, 2006 7:14 PM
Mary and Joe: Thanks for your thoughts
Joe: I’m not sure anyone quite knows what the repercussions of this will be. I know some folks are hoping for some better planning. The thing that was stunning to me is that the state had committed to all this cost without tallying up what it would, well, cost.
Mary: This isn’t all that uncommon of an experience. I just usually don’t get in enough of a snit to write about it.
Posted on December 7, 2006 8:56 PM
Mark, my point, is that public officials withholding public records should not be "common" at all when IT IS ILLEGAL. It seems a whole of of public servants get screwed in North Carolina when it comes to open government and oversight . . . because over and over again (especially in healthcare), our leaders exercise no foresight. They don't have to.
Your newspaper should be writing MORE when this kind of misconduct happens. If you did, this crap would stop.
My "snit" is about a life derailed. Yours is about a delayed scoop. You have the power of the press at your immediate disposal. I do not rate.
Something is wrong with this picture.
Posted on December 8, 2006 9:36 AM
Right on Dr. Johnson,
Please note that the minute a republican says something it is a scheme. The scheme of this is old news, the democrats for years have wanted the state employees to pay. They will offer health care to family members for a fee. Once they get their hands in the state employees pocketbook the fee will skyrocket. It takes a lot of money for tall ship trips and to pay Blacks lawyers, and pay for 18 million dollars screw up on I40. My opinion is Mr. Brinker printed excatly what the liberals in Raleigh wanted. Another way to peoples pocketbook. Look out for a 940 million dollar tax increase next year. No election in 2007.
Posted on December 9, 2006 7:48 AM
I knew there was some reason the name Kay Hagan. name did not set well with me. She is against property rights for NC citzens. Source NC propery rights.In other words she is all for eminet domain. Mr. Brinker, why don't you call Mrs. Hagan and ask her about this!!
Posted on December 9, 2006 8:01 AM
Doug:
Always a treat to hear from you. If you'd like to clarify what you mean by Hagan being against property rights, I'd be delighted to ask her about it.
If the source you were trying to cite was these folks :http://ncpropertyrights.blogspot.com/: I've not seen where they've cited Hagan by name, with the exception of their voter guide, which lists her as "Did not respond to survey."
Posted on December 9, 2006 4:09 PM