The N.C. State Health Plan Board of Trustees voted Friday to make changes to Medicare Advantage plans used by about 175,000 state retirees, increasing healthcare costs to help the Health Plan save millions.
Under the changes that will be implemented in 2027, out-of-pocket maximums for those on the base plan increased from $4,000 to $4,500 and the enhanced plan went from $3,300 to $3,700. Copays also increased for hospital stays, specialist visits and imaging.
Notably, members on both plans will go from paying nothing for Part B drugs to $50. That's a category that includes drugs injected or administered by a physician.
During the public comment portion of Friday's meeting, representatives of retired state employees warned that the changes are going to be hard for people to cope with.
"These increases are going to turn our folks on their head. ... They do live on a fixed income, there’s been no increase, their buying power is down I believe about 30%, so this is going to be probably pretty unbearable," said Suzanne Beasley, a lobbyist for the State Employees Association of North Carolina.
Jackson Cozort of the Retired Government Employees Association said his organization has "grave concerns" about the changes to the benefits. He pointed to the fact that most retirees live on fixed incomes and could find it difficult to absorb rising costs.
"For many retirees, health care costs are not simply another line item in their household budget. They are among the most significant expenses that they face. Unlike active employees, most retirees generally do not have the opportunity to offset these rising costs through promotions, salary increases, or additional years of employment," Cozort told the board.
With the Medicare Advantage plans, the State Health Plan sends a check for a certain amount to administrator Humana each month instead of paying based on the healthcare beneficiaries receive. With the updated benefits, that will be about $60 each month for the 157,800 people on the base plan and about $143 for the 19,000 people on the enhanced plan.
That is projected to save the State Health Plan about $54 million.
Tom Friedman, the State Health Plan's executive administrator, said the change on Part B drugs will perhaps be the most consequential. He called them a major driver of price increases for the Medicare Advantage plans.
"These are drugs that are thousands and thousands and thousands of dollars," Friedman said.
Just prior to the board's vote, State Treasurer Brad Briner said he and other board members are aware of the affordability issues that are facing people across the state right now.
"The challenge is that, more broadly, medical expenses continue to go against us in every piece of our population, and so in the spirit of we're all in this together, which I think we sincerely have to be, we think this proposal is prudent from that perspective. But I understand that it's not pleasant," said Briner, a Republican.
The board's vote was unanimous.
In July, the board is expected to vote on premiums for its Medicare Advantage members and its PPO plans.
