After the State Health Plan’s Board of Trustees voted to allow salary-based premiums earlier this year, Board members recently began discussing what possible changes to the plan could look like.
According to the Board, the State Health Plan is facing a $507 million deficit that could grow to an estimated $1.4 billion by 2027.
On Jan. 1, Aetna became the State Health Plan’s third-party administrator at the beginning of this year. The Board voted in December 2022 to switch from Blue Cross Blue Shield, which administered the plan for more than 40 years.
When the plan’s transition was first announced, former State Treasurer Dale Folwell said that none of the benefits or costs would change for plan members. However, state officials have said some changes are necessary for the plan to remain financially solvent.
The plan provides health care coverage to nearly 750,000 teachers, charter school employees, community college employees, other state employees, retirees, and dependents, according to the website.
At the Board’s March meeting, State Treasurer Brad Briner recognized that stakeholders don’t want to see increases in prices under the plan, and said staff are working to gather input on all possible solutions to address the deficit. The State Health Plan has held off on premium increases for seven years, he said.
“Unfortunately, we are now out of reserves. We do not have that option, but we have to do something,” he said. “Our fiduciary responsibility is to keep this plan solvent so that we can continue to offer the benefit for teachers and state employees who serve the state.”
While Board members said they are hoping for the legislature to offset some of the deficit, they said changes to the plan are necessary for sustainability.
The Board did not vote on the new premiums or a final solution at its March meeting. It plans to vote on an updated plan design in May, and premiums will be voted on in August.
At its March 7 meeting, the Board presented three options that it is considering. All of the options would lead to roughly $500 million in savings for the State Health Plan.
Option 1, pictured below, is a “premium focused approach that most maintains existing cost-sharing.” You can see how it compares with the current plan options available.
Option 2, pictured below, makes both plan design changes and smaller premium increases.
Finally, option 3 maintains a lower-cost plan option for individuals and retirees through plan design changes.
Here is a snapshot of what all the options look like.
You can see more about the options, including how the State Health Plan compares to other health plans offered by North Carolina employers, in the full presentation to the Board.
During the public comment period, Kevin Tompkins, executive director of human resources at Vance-Granville Community College, urged the Board to consider the state’s community colleges.
“As someone who has to do the hiring, it takes a lot,” he said, referencing positions in the trades such as plumbing and electrical, among others. “It is difficult to get somebody in to teach those classes. An electrician can make six figures easily, and we’re going to pay him or her, if they have an associate’s, probably around $55,000. So one of the big recruiting things we have is because of the pension and State Health Plan. By increasing the costs and increasing the premiums and increasing the deductibles, that’s going to severely hinder our ability to recruit.”
N.C. Association of Educators President Tamika Walker Kelly said in a statement that the organization has great concerns about the potential changes.
“Public school employees don’t make enough already, and any increase in premiums is going to cause pain for thousands of family budgets,” she said. “There are already too many vacant positions, it is already extremely hard to hire and retain good people, and when we make working for the state untenable, state services will suffer. For those of us in public schools, that means the kids.”
