Despite the differing opinions at Friday’s North Carolina State Health Plan (SHP) Board of Trustees meeting, one thing was certain: the plan will become insolvent over the next two years if premiums or deductibles aren’t increased, according to SHP officials.
“We have a $1.4 billion deficit over two years, and we’ve got $500 [million] in front of us right now that we have, and that’s the problem we’re trying to solve for,” said Tom Friedman, executive administrator for the SHP. “We’ve heard from stakeholders that some benefit trusts are going to be insolvent by the middle of the calendar year. That’s the problem we’re trying to avoid.”
State Treasurer Brad Briner said they are out of reserves, which had been used over the past several years to keep the plan afloat, and that it’s their fiduciary responsibility to keep the plan solvent so that they can continue to offer benefits for teachers and state employees that serve the state.
Friedman said the state currently pays 86% of state employees’ premiums. He also noted that the 750,000 members paid $1.5 billion in premiums into North Carolina health care coverage, which is a significant part of the state’s $5 billion health care economy. The SHP also processes 40,000 claims a day.
He said one of the primary goals is to get members healthier, which would cut costs in the long run.
Amy Auth, deputy treasurer of external affairs, said they have asked the General Assembly for more funding and to increase employer contribution rates for covered employees. She mentioned that although a modest surplus of $544 million has been reported, there are other demands for the money, including Hurricane Helene recovery in western North Carolina.
In addition to keeping the plan solvent, she said they were advocating for increased funding to bring back GLP obesity-management prescriptions for state health-plan members with a significant medical need contingent on their participation in a weight loss or obesity management program.
They are also monitoring Senate Bill 24 and House Bills 46 and 152.
Prior authorizations (PA) were discussed next. Health insurance companies use PAs to help reduce unnecessary care costs and are sometimes used when a doctor recommends surgery or physical therapy, for example.
There is a 97% approval rate for PAs within the system.
One option SHP staff were looking at to cut costs was to remove PA for drugs that cost under $500.
Dr. Brian Miller, one of the SHP Board members, said they should be cautious in wanting to remove the PA for such drugs as opioids that fall in this category. Another board member disagreed, saying those types of prescriptions are normally given out for only five days at a time.
SHP will continue to look at all of the options surrounding prior authorizations.
Most people speaking during a public comment period were against any increases, including Alexandra Fox, a licensed clinical social worker from Central Regional Hospital in Butner.
She said hospital staffing shortages have resulted from a non-competitive compensation package, unsafe working conditions, and a toxic working environment. She noted that between 60 and 70% of the nursing care is currently being provided by contracted private agency staff.
“So, this is a crisis,” Fox said. “We provide critical mental health services to our communities, and some of the proposals offered by this board could harm our ability to provide that care. We can’t afford any increases to our premiums, to our deductibles, or cuts to services we provide. Treasurer Briner is calling on workers to just step up and pay roughly $20 more per month for premiums and that sounds simple enough, but also, that’s money that many of our co-workers just don’t have.”
Perhaps the most heartbreaking comments came from Karina Hernandez, also a social worker from Central Regional Hospital, who agreed with Fox that they couldn’t take another increase. She spoke in place of Su Su, a housekeeper at UNC-Chapel Hill, who was scheduled to speak at the meeting.
A refugee from Burma and the mother of two young daughters, she cleans the buildings, including the biomedical research labs. She is also battling colon cancer.
Hernandez said she couldn’t afford to miss any more work and has opted out of getting treatment due to her low wages and the current price of healthcare.
“She’s literally dying as we speak right now,” she told the board. “She carries on and takes care of the buildings, so we just really want you guys to reciprocate the care and compassion. We are hearing that the state’s surplus revenue last year alone could have wiped out a huge portion of the State Health Plan budget shortfall, but the General Assembly did not see fit to prioritize state workers.”
The board shifted gears and examined how the State Health Plan compares to other companies across the state that employ 1,000 workers or more, including Bank of America, Walmart, WakeMed, and Lowes Home Improvement. They compared the individual and family plan premiums, as well as co-pays.
While most were comparable or even better, the SHP was more costly for specialist visits than other companies’ health insurance plans.
Next, they looked at the 2026 Benefit Plan Design, which included three different options for the average premium, deductible, and out-of-pocket max, based on their 80/20 and 70/30 options.
Another change on the horizon is the phasing out of the Clear Pricing Project by the end of the year. They will rebrand it with a focus on behavioral health, saving $100 million.
The discussion boiled down to looking at spreading the pain across all state employees where everybody’s contributing a little bit, or targeting those utilizing the most care for chronic health issues.
It was noted that anytime those with chronic care health care needs are targeted, it may actually decrease the amount of care they’re getting and increase costs in the long run.
Medicare Advantage rates were not discussed in length, as they will be released in April.
Toward the end of the meeting, Briner said scale is one of the things that the SHP has that hasn’t been appropriately leveraged.
“We’ve spent a lot of time thinking about how we can be aggressive, commercial, and creative in delivering new and better solutions for the State Health Plan members in the future,” he told the board. “You’re going to see some ideas from us that are probably fairly radical over time. You may not be comfortable with them. Our job is to convince you that the commercial aspects of those and the scale that we have in the State Health Plan needs better outcomes for our members as a result of that. And that is where we’re going to begin to pivot in May and beyond.”
The board will meet again in May to finalize benefit designs for 2026. They will vote on the final premiums in August, and open enrollment will begin in October.