State Health Plan raises premiums for 26,000 NC members

Health care premiums for thousands of North Carolina state employees and retirees are expected to increase as the State Health Plan looks for ways to manage a massive funding gap.

The health plan’s trustees voted Thursday to increase premiums for 26,000 people on its Medicare Advantage plan — a move that will affect 4,200 retirees who weren’t fully vested in the health plan and, separately, 22,000 employee dependents for the 2025 benefit year. Members signed up for the Medicare Advantage Base Plan would see their premiums increase by $33 per month starting Jan. 1.

About 150,000 retiree members of the state health plan, which has 750,000 members, will see no increase at all.

The health plan faced a $1.5 billion budget gap over the next three years if the plan took no action, according to State Treasurer Dale Folwell, the chairman of the health plan’s board. The recently enacted state budget funded the plan by $240 million less than needed, he said.

Changes in federal laws and regulations have increased the cost of the state’s Medicare Advantage plans from zero cost to hundreds of millions over the next several years, Folwell said. Meanwhile, COVID-related expenses have cost the plan $528 million — almost 60% of which hasn’t been reimbursed by the General Assembly, according to Folwell, who sought assistance from state lawmakers this week.

“Despite our best efforts, we still face significant headwinds,” Folwell said in a letter Monday to state legislative leaders, who are negotiating how to spend a $1 billion budget surplus.

Representatives for legislative leaders — state Sen. Phil Berger, R-Rockingham, and House Speaker Tim Moore, R-Cleveland — didn’t respond to requests for comment Friday.

In addition to cost increases, the health plan needs an additional $89 million to meet reserve requirements through the end of 2025, according to the treasurer.

The health plan’s board voted Thursday to withdraw $155 million from the retiree trust fund.

Folwell asked lawmakers to authorize the reimbursement of federal pandemic-related funds that were distributed to the state. They’re also asking lawmakers to cover the recent withdrawal from the retirement fund.

The health plan has been working to cut costs though contract negotiations. And Folwell has sought more transparency from health care providers and drug makers as the state has sought to cut costs.

The health plan recently ended coverage of medications such as Wegovy and Saxenda for the purpose of weight loss starting April 1, citing their high cost. Continued coverage would have forced the plan to double its monthly premiums on many members, Folwell has said.

“During a time when state government and teacher vacancy rates are high, we need to provide an affordable, valuable benefit that will serve as a recruitment and retention tool,” Folwell said in his letter to lawmakers. “Investing in the plan's future isn't political, it's mathematical.”