RALEIGH, N.C. (AP) — Democratic Gov. Beverly Perdue and Republican legislative leaders confirmed Wednesday an agreement to fill a $515 million funding gap for the North Carolina state employee health insurance plan while keeping a free premium option for workers intact for at least another year.
Perdue's office and Senate leader Phil Berger announced the deal that appears to end a monthlong stalemate over cost cutting within the State Health Plan, which pays health care costs for 663,000 state employees, teachers, retirees and their dependents. Charles Thomas, the chief of staff to House Speaker Thom Tillis, R-Mecklenburg, said House Republicans also support it.
Perdue vetoed an earlier deal April 13 that would have required the 322,000 active employees and teachers to pay a monthly premium for the first time. She said in her veto message the Legislature hadn't taken into account the needs of teachers by keeping them from the negotiating table.
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Representatives of the North Carolina Association of Educators were involved in the ensuing negotiations. But the group was still unhappy with a replacement bill currently on Perdue's desk that would have kept the mandates on premiums, which would have ranged from $5 to $21.63 per month and directed plan leaders to find savings to offer a premium-free option by July 2013.
"The governor simply could not support a health plan that would cost teachers and state employees more," Perdue spokeswoman Chrissy Pearson said. "She felt strongly in having a no-cost option."
A new compromise approved by a Senate committee Wednesday was expected on the Senate floor later in the day. The State Health Plan will now tap into excessive cash reserves to ensure a premium-free option will remain for the less generous of two policies the plan offers starting this September. The bill also directs health plan leaders to extend the free option though mid-2013 by other operational savings.
As part of the compromise, Perdue will sign both the bill on her desk and the one making its way through the Legislature, Pearson said.
A letter from State Health Plan Executive Administrator Jack Walker to Perdue, Berger and Tillis said there would from $40 million to $50 million in excess reserves at the end of the fiscal year. That should be more than enough to keep a premium-free option in place, Walker wrote.
The N.C. Association of Educators "appreciates Gov. Perdue's strong stand to protect the benefits of public school educators" and is satisfied "we were able to salvage an option that does not require premiums," executive director Scott Anderson said.
The combined package would still require higher premiums for dependent care coverage of about 5 percent annually, as well as higher co-pays and deductibles for all members. The biggest changes may occur in the governance of the health plan. Oversight of the plan will be shifted from the Legislature to the State Treasurer's Office — a key provision sought by the State Employees Association of North Carolina.
Berger said in a prepared statement the compromise "will ensure its future stability and manage health care costs for our teachers and state employees without raising taxes."
State Employees Association Executive Director Dana Cope said his group is pleased with the final outcome and argued the premium-free option would have ultimately occurred anyway without the new bill due to savings found through the plan's new leadership structure.
"What it does is really give the governor a political out so that she can claim some victory, which is fine," Cope said. "It doesn't matter to us who claims credit."
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