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The Bailey specter rises again in General Assembly

RALEIGH — Raleigh lawyer Gene Boyce said the issues were really simple.

Boyce was writing about the Bailey tax case that helped turn him into a feared legal advocate in state government circles. He explained that the case hinged on three constitutional issues, one being that “no state may pass a law that changes employees’ vested contract rights.”

Of course, lawyers enjoy turning simple matters into complex ones. If they didn’t, many would struggle to earn a living.

In the Bailey case, the complex defenses didn’t work. A judge ultimately ruled that North Carolina acted unconstitutionally when it began taxing state employee retirement income, finding that the state couldn’t repeal benefits already promised to retirees.

The specter that is Bailey is rising again in the North Carolina General Assembly.

State legislators are attempting yet another fix of the constantly troubled and ever more expensive state employees health plan.

The latest proposal attempts to close a projected $515 million gap expected to arise by 2013. Co-pays and deductibles would increase under the proposal, and premiums paid for dependent children and spouses would rise as well.

More significantly, for the first time in the history of the state health plan, state employees and retirees would pay a premium, ranging from $11 to $22 a month. They had never paid a premium in the past because of a long-held philosophy that state government might pay less than the private sector but could offer better benefits.

As health care costs have steadily risen, that philosophy — at least as it relates to medical benefits — has begun changing.

The Democrats now in the minority at the General Assembly have accused the Republicans who authored the latest fix of simply “kicking the can down the road.” And the previous fixes put together by Democrats were anything different?

In fact, the bill does some good things.

Putting a premium on employees lessens the pressure to raise dependent premiums and deductibles. Over time, the change could make the plan more competitive for dependents without bankrupting taxpayers.

Legislators also are intent on making a move that should have been made long ago: pushing direct oversight of the state health plan away from the legislature and under an executive branch agency. The office of the state treasurer and a more powerful board of trustees would set policy in the future. (Kudos to state Treasurer Janet Cowell for agreeing to take on the political hot potato. Others weren’t so willing.)

But for all the good, putting a premium on retirees might undo the legislation.

Benefits vested upon retirement are different than those being received by current employees.

Even setting aside the Bailey ruling, court cases decided in 1987 and 2006 recognize the rights of local and state government employees to rely on benefits vested upon retirement.

Legislators can hope that complex legal arguments overcome the simple ones offered by Boyce back in the 1990s. Or they might want to get creative and find another avenue for savings.

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