NC State Health Plan moves toward premium hikes. How much could they rise?
The North Carolina State Health Plan is moving ahead with plans to charge higher premiums in 2026 that vary based on workers’ salaries.
The plan’s Board of Trustees approved a plan Friday to allow the salary-based increases, with a vote on the actual rates expected in the summer.
The decision followed debate on other options to address financial shortfalls in the State Health Plan, which covers more than 740,000 teachers, state employees, retirees and their dependents. The plan faces a projected $500 million deficit in 2026.
Premiums have not been raised for active state employees in a decade.
The vote on the final premium increases is expected in late summer — likely in August — when there is hopefully more “budget clarity,” said Thomas Friedman, the new executive administrator of the State Health Plan. The General Assembly is expected to pass a budget later this year.
Friedman also addressed the State Health Plan’s transition to new administrator Aetna, saying it was going well but that “bumps along the way” were to be expected. The plan has had to field about 15 to 20 complaints per day, he said.
He specifically cited issues with the Clear Pricing Project, in which payments to participating providers are based on Medicare rates. Some providers who were previously signed up for the project have not yet re-enrolled.
Members visiting providers who have left the Clear Pricing Project are seeing higher copays.
How much could premiums rise?
Under the State Health Plan, premiums for active state employees who have attested that they don’t use tobacco are currently $25 under the Base PPO Plan (70/30) and $50 under the Enhanced PPO Plan (80/20).
According to slides presented during the meeting, three scenarios are being considered, with the lowest savings (over $35 million) achieved by raising premiums to an average of $35 under the 70/30 plan and $60 under the 80/20 plan.
Moderate savings (over $100 million) would be achieved by raising premiums to an average of $55 under the 70/30 plan and $80 under the 80/20 plan.
Significant savings (over $500 million) would be achieved by raising premiums to an average of $140 under the 70/30 plan and $210 under the 80/20 plan.
According to a slide, one possible scenario could be that those who make under $40,000 see a $20 increase, while those who make between $40,000 to $65,000 see a $25 increase. Meanwhile, those earning over $100,000 would see a $50 increase.
Employees push back
State employees in North Carolina earn an average base pay of just over $62,000.
During the public speaking period, state workers’ and teachers’ associations pushed against premium hikes.
“People are hurting. Our members are hurting,” said Ardis Watkins, executive director of the State Employees Association of North Carolina. “You can put percentages up there all day. The bottom line is the number of dollars coming out of their pocket, between premiums, between all of the co-pays. It’s not right. We can’t justify it to them right now, and that’s the problem.”
“Y’all have got to look at providers. You’ve got to stop looking to these lowest-paid working people to solve all the problems corporate entities have put on us. It’s not right,” she said.
Tamika Walker Kelly, president of the North Carolina Association of Educators, said premium hikes would lead to the loss of teachers and staff.
“Our crisis was created by state lawmakers who have failed to provide salaries that meet the rising costs that we are all dealing with,” she said, extending an invitation to board members to advocate for increased pay rather than “making it harder and more challenging for educators to access quality health care for themselves and for their families.”
Board of Trustees member Kerry Willis said he did not think anyone on the board was unaware of the burden being placed on state employees and acknowledged that hospital pricing is “ridiculous.”
He said a lot was being looked at for cost savings, including negotiations with providers, but “unfortunately, the General Assembly funds the plan. I can’t control what they give us.”
“Bottom line, at the end of the day, we’ve got to balance this budget somewhere. We’re not allowed to run a deficit. We’re doing the best we can with the tools we’re given,” he said.
Other potential changes
Efforts to improve transparency are being considered, according to Friedman, who said premium increases and potential changes to plan design and formularies — which lay out which prescription drugs are covered — are part of “the first phase” to address the fiscal cliff. Long-term sustainability, he added, will rely on enhanced price visibility and strategic cost negotiations.
“All of us need to understand how much we’re paying for services and how high quality those services are. Are we getting what we paid for? Is it valuable?” Friedman queried.
Friedman said that analyzing provider contracts and service utilization patterns will be central to this strategy. Aetna, the State Health Plan’s new third-party administrator, has agreed to share provider contracts with the plan, unlike Blue Cross NC, the former administrator.
From there, the plan would give members information to “empower” them to pick the most cost-effective, high-quality providers of orthopedics, eye care, weight loss, and maternity care.
Other ideas the board debated, which it has not so far recommended:
- Changes to the Clear Pricing Project: Options range from adjusting rates and copays to limiting the program to behavioral health services or eliminating it entirely for over $150 million in savings. The project, implemented under former Treasurer Dale Folwell, emphasized price transparency by reimbursing participating providers at 160% of Medicare rates. However, it led to an imbalance, Friedman said: lower-paid providers signed up while higher-paid providers often did not.
Medicare changes: Increasing Medicare Advantage enrollment, potentially making it the only premium-free plan or redesigning the 70/30 plan.
Formulary adjustments: Expanding the use of generic medications to reduce prescription costs.
Plan economist Emma Turner also said the plan has submitted a budget request to State Budget Director Kristin Walker for a new obesity management program, which includes funding for coverage of the weight loss drugs known as GLP-1s.
