News-Record.com

I am by no means an expert concerning the ongoing problems with the state health plan. But judging from the latest audit report, there are few who can claim to be. And really, it doesn't take a rocket scientist to know that losing $79.7 million when you projected earning $57.9 million indicates something is out of whack.

The state auditor posted this audit report today (click here) detailing some of that out of whackness.

Among the findings:

"The BCBSNC contract limits the Plan actuary's ability to forecast administrative expense accurately because:

• * The contract requires the State to reimburse BCBSNC its costs, but does not specify which costs are allowable or how BCBSNC will measure those costs;

• * The contract allows BCBSNC to control any audit of BCBSNC costs initiated by the State Health Plan and prohibits an independent auditor from providing the cost data to the Plan;

• * The BCBSNC contract is a cost-plus-a-percentage-of-cost contract that provides no incentive to control costs and results in increased revenue to BCBSNC as the State's costs increase.

Does that sound like a really bad contract to anyone else? "We'll pay you some money to do a thing and y'all let us know how much we should pay because, you know, we trust you."

Click here for a thorough and dispassionate rundown from the AP, including this response from BCBSNC:

While current health plan administrator Jack Walker's office agreed that his predecessors failed to share crucial information about the Blue Cross contract, Walker said they were required to keep the otherwise-confidential information from their actuary.

Blue Cross spokesman Lew Borman said "the previous administrators of the State Health Plan, indeed, had the authority and obligation to share the contract and administrative cost information with their actuary." Failing to do that led to the plan's problems, he said. Blue Cross' profit on the contract was less than 1 percent, or $480,000 in 2008, Borman said.

The Blue Cross contract has been a sore point for the State Employees Association of North Carolina, whose union members saw their health insurance costs increase and benefits decrease as a result of the bailout Gov. Beverly Perdue signed last week.

Speaking of the state employees, the leadership of their association sounded none-to-pleased:

RALEIGH— The State Employees Association of North Carolina stands by its position that legislators are at fault for inadequate oversight and failed projections that resulted in the State Health Plan’s financial troubles. As chairmen of the legislative committee that oversees the plan, Sen. Tony Rand (D-Cumberland) and Rep. Hugh Holliman (D-Davidson)--the only two individuals with full access to the administrative contract with Blue Cross and Blue Shield of North Carolina--bear full responsibility for the health plan shortfall.

“It’s easy to blame a former plan administrator, but Senator Rand and Representative Holliman dropped the ball,” said SEANC Executive Director Dana Cope. “They shouldn’t have been surprised by a major shortfall if they were truly watching over the health plan on behalf of its 667,000 members and state taxpayers.”

Click here for more of their release.

In that release, they point out that a 2003 audit found many similar deficiencies, saying that the state didn't track expenses closely enough. Click here for the copy of that that SEANC attached to their release.