State-run health plans known for deficits, mismanagement

If you’re wondering what a worst case scenario might be for HB5345, the proposed Michigan Health Benefits Plan, you don’t need to look any further than North Carolina.

This year, taxpayers will pay $250 million to bail out their state-run health plan.
In two years, that number will rise to $678 million because of cost overruns and little or no oversight.

Are Michigan taxpayers ready to do the same? Can we afford to take that chance?

The North Carolina debacle is just one in a long line of mandated state run health plans with huge deficits and bureaucratic mismanagement. In New Jersey, investigators believe the state may have misspent $185 million in the last five years by paying claims for people fraudulently listed as dependents of state employees. And in West Virginia, the system is so overrun that the state is proposing to cut off all retirees from any health insurance coverage in order to balance its books.

And that’s just the money. What employees in those states will tell you is that state-run health plans absolutely put the government between you and your doctor—with incredible consequences.

The most egregious example might lie in West Virginia, where state administrators say they are spending too much money on “end of life care.” The solution? Lawmakers there are proposing that any employee who wants to be insured on their standard plan must sign an “end of life agreement” or living will. If the employees refuse, they are put into a much more expensive “basic” plan with fewer benefits.

In North Carolina, public employees this year are seeing just how far their government will go to keep health costs down—never mind the cost to medical privacy. State health plan administrators say they will conduct random “smokealyzers” and unannounced body fat testing of everyone on the state plan. If employees refuse—or if they fail to meet state board standards—they will be ineligible for standard insurance and be forced into a plan with fewer benefits and higher costs.

These invasive practices and the potential for the huge cost overruns that often come with state-run programs are all the reasons needed to oppose Michigan’s ill-conceived plan.

Related:

Contact your state legislators and tell them that HB 5345 is bad for Michigan.

See media coverage of North Carolina bailout

Updated: September 23, 2009