NC State Health Plan leaders vote to raise health insurance premiums on state workers

Costs are going up for most of the nearly 800,000 people on the North Carolina State Health Plan, which provides insurance for teachers, state employees, retirees and their families.

The plan's leadership voted unanimously Friday to hike premiums and deductibles on most of the plan's members, citing a $500 million shortfall looming next year. State employees will see the higher prices this fall, when open enrollment begins for next year's coverage.

Due to a new sliding scale being implemented, the hardest-hit state workers will be the ones making the most money. Many of those making more than $90,000 a year will see their monthly premiums more than triple.

But the majority of people on the State Health Plan — who don't insure any other family members, and who make under $65,000 a year — will see lower increases: From $25 a month to either $35 or $50 a month for the basic plan, depending on their income. That means paying $120 to $300 extra annually.

And for some, costs could actually go down. Those who are smokers, and those who insure their children through the plan, could see their rates drop or stay relatively flat.

Retirees on the plan will see their monthly premiums remain the same, although their prescription drug costs could increase.

The plan is also rolling out a method of steering people toward certain surgeons who have agreed to a lower-than-normal rate, which plan director Tom Friedman said should allow state employees to pay $0, or close to it, for a surgery.

While people are going to be understandably mad about the higher premiums, Friedman said, the no-cost surgeries could be life-changing.

"People have, generally speaking, not gone bankrupt from your healthcare premium going up $120," Friedman said. "They go bankrupt from a $17,000 surgery they can't afford."

But not everyone has surgery. Everyone does, however, have to pay premiums to get insurance. At the meeting on Friday, several state employees, retirees and their advocates spoke against the planned hikes.

Charles Owens, a worker at the state's psychiatric institute in Goldsboro at Cherry Hospital, noted that he and his colleagues spend all day working with people who have been deemed too dangerous or unstable to remain in society, or even in the state's prison system.

The mental hospital staff already work 12 to 16 hours a day because of severe understaffing, he said. The combination of higher health care costs and little to no raises from the state legislature will likely only drive out even more employees and make it even harder to hire replacements, said Owens, who also serves as a vice president in UE Local 150, NC Public Service Workers Union.

"A steady paycheck and a decent health care benefit were the last things that were assisting us in getting new hires and retaining permanent staff," Owens said. "With the minuscule raises, the exorbitant increases in our health care costs, along with this diminished coverage that Aetna provides, we can't acquire or keep competent and reliable staff."

Friedman defended Aetna, the company that took over the State Health Plan this year from Blue Cross Blue Shield, which had run the plan for the previous 40 years. But the politician leading the push for higher premiums, Republican State Treasurer Brad Briner, acknowledged that state workers are right to feel angry about the premium increases. Briner took office in January and said he inherited a mess that he's now scrambling to fix: The plan is facing a $500 million deficit next year unless premiums go up and costs go down.

"We know you don’t like it," Briner said. "We don’t like it either. But it’s the only way out of this hole."

Not everyone agreed that hiking premiums is the only solution.

Ardis Watkins, who leads the State Employees Association of North Carolina, said the State Health Plan has allowed hospitals to charge exorbitant rates for too many years. Standing up against the power of the hospital industry would take political fortitude, she said, but needs to be done — instead of hiking costs for state workers who also aren't in line for a raise this year due to the state legislature's failure to pass a new budget.

"They're already going behind because of inflation," she said. "They are likely not going to get a raise at all. This sets them so far behind that it's absolutely wrong."

Political pressures

The legislature has passed a partial spending plan, mostly aimed at keeping schools fully funded, but which also included $100 million for the State Health Plan. Friedman said without that money, they might have been talking about charging state employees thousands of dollars more per year in premiums instead of just hundreds.

But with a $500 million shortfall, $100 million also didn't address the majority of the issue. Bryan Proffitt, a public school history teacher and the vice president of the North Carolina Association for Educators, said Briner shouldn't have settled for just $100 million from his fellow Republicans in the state legislature. There are so many state employees being affected in all 100 counties, Proffitt said, that the legislature should feel more political pressure to take care of them.

"What we're here to ask you all to do today is not to give state lawmakers a free pass on continuing to underfund our schools and benefits while continuing to give tax breaks to the wealthiest North Carolinians," Proffitt said. "We're here today to ask you all — ask them to do their jobs, to demand the funding that we need, and to stand with us."

Briner said the solution isn't a simple as pumping taxpayer money into the plan. Private market health plans consistently raise premiums on their members due to the ever-increasing cost of health care, he said, and he believes the State Health Plan made the wrong call to keep premiums frozen under former State Treasurer Dale Folwell — a Republican who left office after losing the 2024 GOP primary for governor.

"We’re here because of the short-sighted decisions of my predecessor," Briner said. "Premiums were frozen for years, and members were led to believe it could be that way forever. But the plan was actually spending more than it took in each and every year."

But the state worker advocates Friday said the State Health Plan shouldn't be treated like a private market plan. One of the underpinnings of state government work has always been the implicit deal that people in government jobs will make less than they could in the private sector, but in return will have better benefits and more stability. Now they fear that deal is eroding even further.

"We have already pushed so many people out of the professions that they love," Proffitt said.