New treasurer, same State Health Plan mistakes

North Carolina Treasurer Brad Briner says moving many Atrium Health providers and facilities out of network for the State Health Plan is just “behind the scenes bookkeeping,” and that members who choose Atrium can be “held harmless” by Atrium if it chooses to. That overlooks how the tiered plan works. Out-of-network status raises costs for members, and it can raise them for the State Health Plan as well.

I teach economics and personal finance, and I raised this concern with the treasurer’s office months ago. Out-of-network care requires members to meet a deductible before coinsurance begins, which makes that care significantly more expensive for patients. In some cases, an out-of-network visit actually costs the State Health Plan less than the same visit in-network.

One goal of the new tiered plan is to steer members to preferred in-network providers. The new tiers quadruple the out-of-network deductible, strengthening that push. But steering members toward care that costs the plan more undercuts claims that the new system will save a significant amount of money.

Lower member bills are not lower plan costs

Members who want smaller bills can move into the network. For the individual, that is sound advice. For the plan, it works against the stated goal, because the plan carries a much larger share of in-network costs. A quadrupled deductible saves the plan money only if members keep paying out of pocket or skip care. When members do what the policy encourages, changing to an in-network provider, the plan’s costs increase.

Steering benefits providers, not necessarily the plan

Preferred-provider arrangements trade lower negotiated prices for a promise of patient volume. Higher deductibles and removing a system like Atrium are tools for delivering that promise. Providers who gain patients benefit, but it is not clear the plan or taxpayers do. A plan’s first obligation should be to its members and to the taxpayers who help fund it.

Taken together, these concerns point to a basic problem of incentives. A policy that rewards the behavior that costs the plan more, and penalizes the behavior that costs it less, deserves scrutiny.

A familiar pattern

Briner has criticized his predecessor’s approach, which is why the similarities are troubling. In 2019, then-Treasurer Folwell came within weeks of removing most health providers from the network just before open enrollment. Removing a large system like Atrium now raises similar concerns about in-network access, just as members are expected to choose their health plan.

The Clear Pricing Project also relied on steering members toward certain providers. Providers benefited financially, and the plan lost around $150 million annually for several years. When steering incentives are not aligned with the plan’s interests, costs can rise instead of fall.

I do not doubt that the treasurer’s office is trying to manage costs. However, its current approach appears to replicate the same approach that Briner criticized in his predecessor.

Open enrollment has begun, and members like me are choosing coverage without a clear explanation of how continued “steering” through quadrupling out-of-network deductibles and removing providers from the network will save the health plan money. These are matters of arithmetic and incentives, not politics. I hope the treasurer will address them publicly and promptly, while members can still use the answers. State Health Plan members and the taxpayers who help fund their coverage deserve transparency and effective fiscal responsibility.