Smoke and Mirrors

My Nokia cell phone doesn’t have a lot of bells and whistles. I can’t snap photos with it at the family reunion or use it to post Facebook updates while standing in line for ice cream at the D.H. Hill Library.

So I was surprised to discover that – much like a double scoop of Howling Cow – my slender little phone is making me fat.

I discovered this inconvenient truth at the NC State wellness fair last week, when I stepped on a computerized scale to get my body mass index (BMI) checked. As I stood on the scale in my bare feet, waiting for the computer to analyze the percentage of my body fat, it occurred to me that I probably should have removed any and all unnecessary baggage first. The technician kindly agreed to let me retake the test after I removed my cell phone from my belt and tossed it on a nearby table.

I didn’t really think it would make a big difference. After all, the cell phone weighs just a few ounces and it certainly looks lean. If anything, I expected to find that I had a slightly higher percentage of body fat without the phone on my hip.

Not so. With the phone, my body is 18.6 percent fat; without it, I’m a svelte 18.4. I never did get my actual BMI (which is a slightly different measurement than percentage of body fat); the machine malfunctioned before it could finish the calculation – both times.

None of this would matter much except starting in 2011 you could face higher deductibles and higher health care costs under the State Health Plan if your body mass index is too high. When an outside vendor comes through your office to conduct random tests, you’ll be glad you know to remove your cell phone before stepping on the scale.

It’s not just fat that can get you in trouble with the State Health Plan. Starting next July, the plan will institute changes affecting people who use tobacco products.

For those looking for the silver lining, there’s some good news. If the new regulations prompt state employees to stop smoking and start exercising, that could result in a healthier, less stressed workforce, and long-term savings for the state.

That was the idea behind the new wellness initiatives when they were adopted by state legislators and signed into law by Gov. Perdue in April. Here’s how they work:

1. Every year, starting next July, health plan members will have to attest that neither they nor any of their covered dependents use tobacco products. If you meet the requirement, you’ll be able to enroll in the standard 80/20 plan. But if you or any of your covered dependents use tobacco, you’ll be limited to the basic 70/30 plan.

2. Every year, starting in July 2011, members will have to attest that neither they nor their covered dependents have a BMI that exceeds a certain number. In 2011 that number will be 40; the next year it will drop to 35. If you meet the requirement (in addition to the tobacco requirement), you’ll be able to enroll in the 80/20 plan; otherwise you’ll be limited to the 70/30 plan.

BMI is a formula that measures your weight divided by the square of your height. If you’re a middle aged woman who stands 5’5” and weighs 215 lbs., for example, you have a BMI of about 36.

Random Testing Planned

To keep us honest, the State Health Plan is going to pay a company to conduct random tests in the workplace: a saliva test for tobacco and a BMI test to verify body mass.

You’ll have a financial incentive to avoid tobacco and keep your BMI under the limits set by the new regulations. Starting next year, families on the 80/20 plan will face an annual deductible of $1,800 plus an out-of-pocket maximum of $8,250 (in-network) for the year. But families on the 70/30 plan will face an annual deductible of $2,400 plus an out-of-pocket maximum of $9,750. Failing to meet the wellness requirements could cost you as much as $2,100 a year if you’re covered with your family and as much as $700 a year if you’re covered as an individual. If that happens, the financial implications will feel more like a penalty than an incentive.

The new rules apply to all state employees and retirees, as well as their covered dependents. They don’t apply, however, to employees and retirees who are covered by Medicare as their primary insurance. There are no plans, yet, to conduct in-home tests of retirees.

If the new regulations seem more stick than carrot, there may be a good reason. The State Health Plan, which is self-funded by the state of North Carolina and administered by Blue Cross Blue Shield of North Carolina, had a net loss of $80 million in fiscal year 2007-08.

The reason, according to the state auditor, is simple:  the plan spent more on both administrative expenses and claims than it projected. The number of new health plan members grew, but so did the number of claims. With the phasing out of the indemnity plan, more members came into the PPO plan with its more generous benefits.

What’s Driving Up Costs?

The rise in claims may also be tied to the fact that only a quarter of the health plan’s 666,000 members are the dependents of current state employees. That’s a problem, Rep. Wil Neumann told the Associated Press in April, because there are too few young and healthy families paying into the system. While the average age of plan members is 46, retirees and their dependents make up fully 25 percent of the membership. A study prepared for the State Health Plan in 2006 found that retirees covered by the system would eventually cost the state nearly $24 billion. The study estimates that an annual contribution of $2.4 billion is required to support the retiree medical benefits.

On a side note, the State Health Plan’s budget crisis earlier this year need not have been a surprise at all. The state auditor found – and health plan Executive Administrator Jack Walker acknowledged – that the plan’s management, “failed to inform the legislature in a timely manner about the plan’s financial status.” By the time legislators learned of the budget shortfall in January, the plan needed a cash infusion of $250 million to keep it afloat, and state officials were told they’d have to take fast and dramatic action to rein in spending.

To bring the plan back into budgetary balance, the state has a few options; it can reduce administrative expenses or reduce claim-related expenses, or a combination of both.

Reducing administrative expenses, it turns out, is problematic. In a recent performance audit of the State Health Plan, State Auditor Beth Wood noted that Blue Cross Blue Shield keeps some administrative information confidential.

“Consequently,” she wrote, “the State Health Plan has agreed to a contract that requires the plan to reimburse BCBSNC [Blue Cross Blue Shield of North Carolina] its costs, but does not allow the plan to verify those costs or even know what they are. Therefore, BCBSNC could charge the plan for expenses and overhead that plan management might not agree were true costs of the plan.”

Under the terms of a contract that runs through 2013, Blue Cross Blue Shield not only receives reimbursement for its administrative expenses, but also a guaranteed profit. For an eye-opening look at the problems with the State Health Plan, read the entire performance audit.

If administrative expenses aren’t on the chopping block, that leaves the State Health Plan with the other option, looking for ways to cut claim-related expenses. That’s exactly what the wellness initiatives will help do.

Anne Rogers, director of integrated health management for the State Health Plan, says the wellness initiatives will save the state about $13 million in 2011. That short-term savings will come as a result of some plan members picking up more of their health care costs when they’re forced to move from the 80/20 plan to the 70/30 plan – either because they don’t meet the wellness requirements or because they fail to file the paperwork attesting that they qualify for the 80/20 plan. Rogers doesn’t know how many people that will be, but says an estimated 70,000 members use tobacco and up to 14 percent have a BMI of 35 or more.

Linda McCrudden, the health plan’s director of communications, says the changes are designed to benefit employees, not just reduce expenses.

“It’s not about tricking people or tripping them up,” she says. “It’s about improving people’s health.”

Exemptions Soften Impact

In fact, the new rules provide some leeway for health plan members who make a good-faith effort to comply. Members who participate in a tobacco cessation or weight management program will be allowed to enroll in the 80/20 plan if they submit a form signed by their physician.

The state is also offering programs and other assistance for health plan members who need help with smoking or weight management. For tobacco users, the plan covers nicotine patches, cessation counseling, coaches and prescription medications to reduce the craving for nicotine.

For members struggling with obesity, the state reduced the cost of participating in its 15-week support program, “Eat Smart, Move More, Weigh Less,” to just $30. Members who complete 10 of the 15 classes will receive a refund of $25. The remaining $5 pays for a magazine and journal. Classes will be offered on campus after the first of the year, according to the benefits office. The Bulletin will publicize the schedule as soon as it’s finalized.

NC State employees can take advantage of other programs and services on campus, including a variety of weight management programs, like Weight Watchers at Work, and fitness programs offered by Campus Recreation.

Dr. Carolyn Dunn, a professor and nutrition specialist in Family and Consumer Sciences, says the wellness initiatives may prompt people to examine their health status, even if they’re not directly affected by the new regulations.

“It’s a wake-up call to examine those aspects of our lives that have a cascading effect on every aspect of our health,” she says.