North Carolina State Treasurer Dale Folwell sounded the alarm on the financial solvency of the State Health Plan at the Council of State meeting and on his monthly “Ask Me Anything” call with reporters on Tuesday.

He said that between hospitals overcharging state employees for cancer drugs, changes with the Medicare Advantage plans, not being fully reimbursed for COVID-19-related health costs, and past costs for weight loss drugs, the State Health Plan is going to need some emergency funding very soon.

“We spent over half a billion dollars on COVID-related activities, doctor and hospital visits, vaccines, and all kinds of things related to COVID, and the state of North Carolina has seen billions and billions of dollars from federal government COVID-related activities, and we have not been reimbursed for that,” he told Council of State members. “It’s going to necessitate the State Board of Trustees to make some very tough decisions about employer premiums. We cannot continue to see prescription drug costs going up 10% a year, healthcare costs going up 8% a year, and us being funded at 4% (by the General Assembly) a year.”

Folwell told reporters on the call that during his tenure as “the keeper of the public purse,” the SHP has worked to lower healthcare costs, which would reduce the trend of unfunded healthcare liabilities and try to build up its reserve funding for its unfunded healthcare liability, which was 2% funded when he took over, and now is about 10% funded.

He mentioned that at one point over five years ago, according to Pew Research on a per capita basis, North Carolina’s unfunded liability was behind Illinois.

Folwell said the SHP continues to work on getting COVID money reimbursed.

“There seems to be an attitude, from what I understand, by the General Assembly, to just take the money of the woefully unfunded healthcare liability fund, which as I mentioned earlier, we’ve worked hard to get it from 2% funded to 10% funded,” he said.

Additionally, he said, the zero monthly premium for health plan members for the Medicare Advantage plan, along with the $4 a month premium for dependents with no cost to the taxpayers, is going away.  

Several years ago, Folwell said, the SHP was able to negotiate those costs and was hoping to get two more years of extensions on the Medicare Advantage product, but they have been unable to successfully renegotiate that based on a small change in federal law. The change gave Humana, the company holding the Medicare Advantage contract, a loophole, according to Folwell, allowing them to truncate the fifth year of the contract featuring $0 premiums and $0 cost the taxpayers.

Despite deciding to end coverage of popular weight loss drugs, including Ozempic and Wegovy, as of April 1, the SHP has put out a request for information (RFI) to see if there is a way to purchase the drugs at a lower cost.

Folwell mentioned that Sen. Bernie Sanders, D-VT, said that the costs of the drugs would impact Medicaid and Medicare in the US with a nearly $3 trillion expense.

He said the SHP receives hundreds of millions of dollars in rebates on prescription drugs through its pharmacy benefit manager, and the rebate program should not be jeopardized over disagreements over one drug.

Folwell also said he thinks that NCDHHS is moving down the path to start covering the weight loss drugs for those on Medicaid who have heart conditions.

“If DHHS is attempting to start covering these weight loss drugs for their customers, we’re going to be asking what they’re paying for it,” Folwell said. “It should be public record what they’re paying for this drug, and if they’re getting it cheaper than we are. We’re not paying for it anymore, but if there’s any opportunity for the State Health Plan, from the buying power standpoint, to work with the DHHS, we’d be very interested in that.”

He also talked about the report released last month that showed hospitals in the 340B Program in North Carolina are overcharging cancer patients in the SHP at an average rate greater than five times the cost of cancer drugs. Folwell gave the example of Atrium Health, saying they’re buying the drugs for about $500 a dose and selling them to the SHP for $6,000.

“There should be a way to resolve this,” Folwell said. “It’s a serious topic, and it’s not just this drug. It’s other specialty drugs that are driving up the cost of healthcare. So we are cautiously optimistic. We’re not playing. It’s a serious issue, and I’m only interested in dealing with this with people who are truly focused on solving the problem.”