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October 2009 St@teside

North Carolina State Employee Health Plan: Can Higher Insurance Premiums Encourage Healthier Lifestyles?

North Carolina is on track to become the second state in the country—following Alabama—to charge a higher premium to state employees who are obese.  However, smokers in the state employee health plan (SEHP) are the group that will face higher premiums first.  Starting in July, smokers will be placed in a more expensive plan, while those qualifying as obese will become part of this plan in July 2011.  The SEHP covers more than 600,000 state employees, retirees, and teachers with a total cost last year of $2.6 billion.1

With these planned changes, North Carolina officials aim to address the trend of steadily increasing health care costs for state employees each year.  Anne Rogers, director of integrated health management with the SEHP, notes that the state needs a healthier workforce and that it makes sense to focus on smokers and the obese because “tobacco use, poor nutrition, and inactivity are the leading causes of preventable deaths in (the) state.” 2   State officials have yet to estimate the potential savings from the obesity requirement, but have projected that the higher premiums for smokers could save $13 million in the 2010-2011 budget year.

Alabama will take the lead in this area staring in January when state workers will have their blood pressure, cholesterol, glucose, and body mass index checked and then will be charged an extra $25 per month on their insurance premium if they fall within a risk category (i.e. body mass index of 35 or greater or a blood pressure of 160/100 or greater).  The $25 charge each month will be subtracted if they go to a health screening.  In North Carolina, state workers with a BMI of up to 40 will be able to keep the discount.3

It will be a while before states can know if charging higher premiums for smokers and the obese will encourage healthier lifestyles and eventually a healthier workforce.  It is likely that other states battling high health care costs associated with tobacco use and obesity—West Virginia, for example—will take the leap in charging higher premiums to higher risk groups even before findings demonstrate the value of this approach.


 1Johnson, M.  N.C. to Penalize Obese Workers, Those who Smoke, the Charlotte Observer, October 7, 2009.

2 Ibid.

3 Ibid.