North Carolina’s finances are heading in the right direction in the new year, according to State Treasurer Brad Briner.
At the beginning of 2025, the state owed $54.5 billion, comprising $34 billion from the State Health Plan, $18 million in pension liabilities, and $2.5 billion in tax-supported debt.
A year later, the total debt has been reduced to $34.5 billion, a $20 billion reduction. Of that amount, $10 billion is determined by the treasury rate and federal policy.
The rest of the savings came from two major initiatives: changes to the State Health Plan and replacing the state’s sole fiduciary model for its pension fund with a five-member North Carolina Investment Authority Board.
The board assumed fiduciary responsibility of the $139 billion state pension plan on Jan. 1.
“It changes fundamentally how we make investments in the state, which matters a great deal to everybody, not just state employees,” the treasurer told Council of State members at their meeting on Tuesday. “That program earned $16 billion, which is a record for the year. It looks like the second half may end up eclipsing the first half as the most profitable half a year in state history. I’m not going to try to go through all the actuarial math of how we get some pension deficits, how we calculate them, and how they come into being and disappear. But in plain English, we reduced the deficit that we owe the pension system by 40%. We still have about $10 billion to go before we eliminate that deficit.”
Briner acknowledged that the changes to the State Health Plan were not the most popular or comfortable, but were needed in order to make the plan solvent.
A $1.3 billion deficit was projected in 2027, but changes implemented by the SHP board and the General Assembly were able to reverse this trend and bring the plan about $30 million above its reserve rate, according to Thomas Friedman, executive administrator of the SHP.
The plan’s original projected deficit was $507 million in 2026 and between $800 million and $900 million in 2027.
In August, the board agreed to raise plan premiums for the first time on a sliding scale based on income, with the smallest increases going to the lowest-paid state employees.
Former State Treasurer Dale Folwell maintained a policy of not increasing premiums, instead using cash reserves to offset increases.
On May 20, the board reconvened and approved changes to the SHP benefits, raising annual deductibles for singles and families under the 70/30 (Standard PPO) and 80/20 (Plus PPO) plans starting in the 2026 benefit year.
The treasurer told state leaders that he wants to prepare them for what’s to come in 2026.
“You’re going to get a different kind of constituent outreach in 2026, so I want to prepare you for that,” he said. “What that looks like is providers coming to you, complaining essentially as we go towards transparency of price and running competitions for our members’ business. The providers will call you or email you and say that we are unfairly putting them out of network, and that our members won’t have access to credible services, and that their existence is threatened by our actions. You should know that that’s simply not true.”
Briner said they have run competitions for their over 750,000 members’ business and invited every high-quality provider in the state to participate. Some of them decided not to, and some of them “did not win.”
“Those who either decided not to or did not win inevitably will reach out saying this is unfair in some way. But I assure you, we ran transparent and fair competition for our business,” he said. “This is the only way we’re going to address the underlying root cause of health care costs in our state by applying added pressure, and so we’ve done that. But not everyone’s going like that, and you will hear about it. Please reach out to me directly, or reach out to Tom Friedman directly. We are as transparent as we can be on this point, but again, not everyone will like it.”
Last year, the State Health Plan Board of Directors approved the use of Lantern, a digital specialty care platform which offers members no‑cost access to a vetted network of surgeons and specialists. Lantern also provides personalized support through dedicated care advocates and nurse navigators, while helping control costs for both members and the plan.
“The more folks that get surgeries through Lantern, the lower future cost growth increases are going to be because we’re paying less money for it. And I would tell you the state employees have been fantastic partners that help us do that,” Friedman told reporters on a Q&A call in early December. “We already have over 200 cases before the program even starts in earnest in January, so we’re making tremendous progress in terms of addressing unit costs, and we’re going to continue to push on those things.”
The treasurer also mentioned that there was an error made by Aetna, the plan’s third-party administrator, in printing insurance cards, which have an effective date of 2025. He said the cards are valid and new ones will not be sent out, saving the $500,000 cost of reprinting them.
Additionally, Briner noted that the nctreasurer.gov webpage features an accountability section that provides accountability metrics from six different divisions, including the State Health Plan, Retirement Systems, Unclaimed Property, State and Local Government Finance, Investment Management, and Financial Operations.