Freeze era over: NC treasurer says State Health Plan premiums will rise with needs
AI-generated summary reviewed by our newsroom.
- The State Health Plan raised premiums and restructured benefits to close shortfalls
- Now the health plan is likely to propose more premium increases for state workers.
- Board votes on premium increases and benefit changes would come in 2026 for 2027.
The rise in premiums for the State Health Plan this year is not likely to be the last.
Instead, the increase in costs for plan members marks a shift from how the plan was run under former Treasurer Dale Folwell, a Republican who held premiums steady for years while at times clashing with lawmakers over the plan’s financial woes, and with hospitals and insurers, arguing they needed to increase transparency and rein in costs.
State Treasurer Brad Briner, also a Republican, has taken a different approach since taking office in January, saying decisive action was needed to deal with projected shortfalls, including a projected $500 million shortfall in the plan’s finances in 2026.
That has included raising premiums for all state employees on a sliding scale based on salary; raising deductibles and making other plan design changes; launching an initiative that lowers costs for members who use certain providers; and offering some no-cost surgeries for active employees through a new partnership.
The premium raises sparked backlash from state employees, who earn an average salary of just over $60,000. Many went before the State Health Plan Board of Trustees to oppose the premium hikes, saying the added cost would strain their budgets.
Despite pushback, the board voted unanimously to approve salary-based premium increases in August.
But the raises were not a one-time thing.
“It’s unrealistic to expect premiums to remain flat given rising health care costs,” Briner said Monday during a question-and-answer session with reporters.
Thomas Friedman, executive administrator of the State Health Plan, said Monday that officials would likely ask the board next year to raise premiums for 2027. “I would anticipate benefit changes in ‘27,” he said. We’ll be voting on those in March. I would anticipate premium changes. Those will be voted on in August.“
“I think both will be a lot smaller in terms of magnitude and scope than this past year,” he said.
Expenses above revenue
Open enrollment for the State Health Plan ran from Oct. 13 to 31.
Friedman said Monday there were “a couple of surprises” after enrollment.
That included an uptick in employees enrolling their children.
Premiums for 2026 increased in most cases for employees who opt to cover a family member — with some exceptions, including for certain employees covering children.
More people also enrolled in the Plus PPO plan — the higher-cost option with richer benefits — despite higher premiums.
“I think that’s probably a little bit in response to the economy and a few other things kind of going on, where people want more security in their health plan,” Friedman said.
Friedman said the plan does not expect to run a deficit in 2026 or 2027.
“We were projecting a $1.3 billion deficit in 2027, and now we’re about $30 million above our reserve level. So, astronomical changes,” he said. “But that doesn’t mean work doesn’t still need to be done.”
Asked for more detail on what future premiums and benefit changes could look like, Briner said his office’s goal is to keep employee premiums stable as a share of income over time, even if dollar amounts rise.
“It is important for people’s budgeting that they know how much of their paycheck will go to health care, but it is equally unrealistic to expect that on a dollar basis, that they (premiums) never go up,” he said.
Briner said the State Health Plan has made “very good progress” financially but added that costs are still rising faster than revenue.
Medical costs are increasing at about 6% annually, while revenue is growing closer to 3%, he said.
“If your expenses are going up faster than your revenues, you’re going to be in trouble sooner rather than later,” he said.
Friedman said how much costs rise in the future will depend in part on how effectively cost-control measures and changes — such as a new surgical benefit — work.
“We’re going to continue to push on finding those opportunities to reduce costs,” he said.
“The more successful we are, the lower out-of-pocket costs members have, the lower premium increases there are,” he said.
Friedman opted not to offer specific examples of potential increases. “What health care is going to look like in 2028, I think, is probably as clear as what the economy is going to look like in ‘28, what cryptocurrency is going to look like,” he said.
The SHP board of trustees is meeting on Friday.
