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North Carolina State Health Plan’s Staggering Losses

Posted May 12 2009 5:43pm

The State Health Plan - North Carolina’s health plan for state employees lost $137.6 Million in the fiscal year ending in June 2008.  The plan covers roughly 667,000 North Carolinians.  The primary driver of the financial implosion was the introduction of a more generous PPO health insurance option that prompted 76,000 existing enrollees to switch over to this plan, as well as prompting an additional 30,000 state employees to sign up for the state sponsored plan.

The members who were enrolled in the PPO plan specifically took advantage of routine eye and hearing exams and their increased utilization of services overwhelmed the discounts with network hospitals and doctors negotiated by Blue Cross Blue Shield of North Carolina (BCBSNC).

BCBSNC, The largest North Carolina health insurance company administers the PPO plan, and claims ended up costing nearly $164 million more than was projected.  In addition, administrative costs were extremely high ($66.6 Million), but they were allowed based on the contract that was signed.

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