Brad Briner inherits a daunting problem as he assumes the job of North Carolina state treasurer this month: the $507 million debt of the State Health Plan, which provides health insurance to 750,000 state employees. The budget shortfall is estimated to grow to $1.4 billion by 2027.
In August, current treasurer Dale Folwell announced that the plan may be unable to stay afloat by fall 2026 due to dramatic increases in the cost of health coverage. North Carolina ranks No. 1 in health care costs by state, with the most expensive health care in the nation, according to Forbes.
Folwell called on the General Assembly to step up and provide the funding needed to keep the plan solvent. Briner thinks this is a waste of time.
“The expectation that the General Assembly can or should fix this problem is just not based in reality,” Briner told Carolina Public Press.
“We are going to have to do a number of uncomfortable things. With a $507 million shortfall, the uncomfortable pieces are now inevitable. The obvious one is premiums. Those have been held flat for a decade, and I commend Treasurer Folwell for focusing on that, but it’s unfortunately time that we keep up with inflation.”
Changes to what drugs are covered by the plan are also coming, Briner said, with a focus on switching to generic versions of brand-name drugs. In March, the plan stopped covering blockbuster drugs for weight-loss like Ozempic. Other expensive offerings could be on the chopping block as well.
“Everything is on the table,” Briner said. “The good news is that everyone understands the magnitude of the challenge. Everybody’s going to have to come to the table with some sacrifices to make.”
Briner has named Duke Health associate vice president Thomas Friedman as his choice to run the plan. Amy Auth will be his deputy treasurer for external affairs.
The plan has spent $538.8 million on COVID-related expenses through July 2024. Only $215 million of that has been reimbursed by the state budget. The state received $110 billion in pandemic relief funds from the federal government. Nearly 60% of that money remains unspent. The General Assembly is apparently not willing to throw more money at the plan.
The North Carolina Association of Educators, which represents public school workers across the state, has serious misgivings about the future of the plan.
“We are deeply concerned about decreasing coverage and increased premiums,” association president Tamika Walker Kelly told CPP.
“We need to make sure rates remain affordable because educator pay has not increased in our state for quite some time. We do not want it to be a hardship for people to have adequate and competent care. That is a benefit that comes with their jobs.
“We do not believe that trying to fill the holes and gaps and address the debt of the State Health Plan should be done on the backs of educators. Our lawmakers need to make sure that they are putting money into the plan to support it. It covers our teachers, our retirees, our families and our communities.”
Wayne Fish, a member of the State Health Plan’s board of trustees, hopes that state employees will not have to face harsh price increases. He blames the General Assembly for not funding the plan.
“I hope they don’t have to sacrifice,” Fish told CPP. “Their counterparts in private sector jobs receive better pay.”
In a slide deck from a Nov. 15 meeting of the State Health Plan board of trustees obtained by CPP, board members floated the idea of limiting retirement plan offerings in the wake of the state Supreme Court decision in Lake v. State Health Plan for Teachers & State Employees. The decision allows the State Health Plan to drop all premium free retirement plans other than the Medicare Advantage plan.
“The State Health Plan has kept the Base PPO Plan as premium free option for all eligible retirees during the Lake litigation in an abundance of caution, even though the Medicare Advantage Plans offer a better value to the eligible members and are significantly cheaper for the Plan,” the slide deck reads.
“With the clarity now provided in the Court’s opinion, the Plan could offer the Medicare Advantage plan as the sole premium free option.”
The state is also switching from Blue Cross Blue Shield to Aetna for coverage on Jan. 1, 2025, a move that Folwell estimates will save tens of millions of dollars.
“As the state treasurer, I have done everything I can to keep the plan solvent,” Dale Folwell told CPP. “When I first came into office, I instituted the first premium on state employees. Because the General Assembly had said, ‘If we’re going to continue to fund the state health plan, the state employees need to have a little skin in the game.’ We’ve been able to hold those premiums steady for eight years.
“At the end of the day, we have done our job. The reason that we are in this situation is that other people haven’t done theirs. Boards of trustees of hospitals don’t hold their CEOs accountable for rising health care costs.
“They have not been transparent with their pricing, they have not matched charity care using the billions of dollars of local, state and federal tax benefits they get. They did not stop breaking people’s kneecaps and putting liens on the houses. They continue to gouge people.”
This article first appeared on Carolina Public Press and is republished here under a Creative Commons license.
