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Blue Cross and Blue Shield of North Carolina has overseen medical claims for North Carolina’s State Health Plan since 2012. It’s a huge job of administering more than $3.2 billion of bills for 700,000 people annually.

But the new third-party adminisration contract awarded this week, which takes effect in 2019, marks a big change, State Treasurer Dale Folwell says. Since winning his post in the November election, Folwell has emphasized the need to shore up the health plan and address the state’s pledges of $30 billion for retiree health benefits, which are not currently funded.

These are his comments on the Blue Cross contract, edited for clarity.

“We’re not renewing our vows, we’re resetting our relationship.

“The State Health Plan has to deal with its long-term sustainability. Based on our projections and our funding levels, we are looking to cut $300 million a year out of expenses [expected to total $3.2 billion this year.]

“They understand our vision. I think their bid shows they understand what we need to be doing.

“I’m optimistic about cutting out costs. Your readers who have consumed any type of health care understand that after they consume it, they don’t know what it costs. We’re going to change that.

“We’re going to have 700,000 watchdogs out there. That’s exactly what we need to sustain the plan.

“Our prescription drug costs are going up at double-digit rates, while our medical costs are going up 6% to 8% a year. Meanwhile, our funding is going up by 4%. We don’t have a choice in this matter.”

United Healthcare, MedCost and Aetna also bid on the contract, Folwell says.

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