The State Health Plan is deeply in debt. To get out of the red, the 750,000 employees who receive coverage will experience something many were hoping to avoid: the first significant premium increase in nearly a decade.
It’s part of the strategy from Brad Briner, North Carolina’s treasurer, to pay off a $507 million shortfall the State Health Plan has accrued due to dramatic increases in the cost of health coverage — a deficit which is projected to grow to $1.4 billion by 2027.
State employees will face a minimum $20 increase in monthly premiums for their health insurance starting in 2026. Those premiums could reach an additional $110 per month. Deductibles and co-pays will increase as well.
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The premium hike will affect even the lowest-paid state employees at a time when many North Carolina agencies face staffing shortages and recruitment challenges.
It all comes after a potential problem was foreshadowed last year by former Treasurer Dale Folwell, who said the State Health Plan — which covers about 8% of North Carolina residents who have medical coverage — may be unable to stay afloat by fall 2026 due to the aforementioned rising costs in care. North Carolina ranks No. 1 in health care costs by state and has the most expensive health care in the nation, according to Forbes.
But Briner doesn’t intend to let the State Health Plan drown in debt.
Paying the price
Folwell’s solution was to have the General Assembly open its wallet.
However, Briner’s plan requires state employees to open theirs as well.
The base premium for state employees will rise from $25 to $45 monthly next year. Increases will reach $110 for the highest-paid employees. Deductibles will increase anywhere from $3,000 to $9,000. Co-pays will rise between $20 and $45 per visit.
All together, it will bring $100 million back into the plan, Briner said.
But he isn’t stopping there. He asked for another $100 million from the legislature, and lawmakers delivered in this year’s proposed Senate budget.
“The Senate gave us everything we hoped they would give us, and we are really, really appreciative that they found the money in a year that everybody knows is really tight,” Briner told Carolina Public Press. “Their number one priority is not the State Health Plan right now. It’s not the State Pension Plan. It is rebuilding Western North Carolina, and we certainly understand that.”
The $100 million could be a boon — provided the House approves the budget and it crosses Gov. Josh Stein’s desk in one piece.
Additionally, $25 million of it is earmarked to bring weight-loss drugs like Ozempic and Mounjaro back into the plan.
In 2023, as a cost-cutting measure, the plan stopped covering the blockbuster drugs. Now, those drugs will be covered once again for state employees who qualify.
“I tend to think about drugs — the useful ones — in one of two ways,” Briner explained. “Either they have a profound impact on a small population or they have a small impact on a profound population. It’s rare that you have a medicine that is both profound in impact and enormous in population, and (these drugs) are that.”
State Health Plan increase ‘significantly high’
But the premium increase is a disturbing development for state employees.
Low salaries are a problem across agencies. At the NC Forest Service, for example, there are 100 vacancies, due in part to a lack of competitive pay. Now, those who chose to work for the service will face higher costs for health insurance.
And it’s not just firefighters. Teachers, too, have been dealing with pay issues.
“We are against any increase to the premiums for public school employees because we know that this increase will take more money out of our educators’ paychecks in a state where our educators are very much underpaid,” said Tamika Walker Kelly, president of the North Carolina Association of Educators, which represents public school workers across the state. “We know that it could be one of the many things that continues to drive our educators out of a profession in a time where we are facing an educator shortage here in North Carolina.”
Recently, the North Carolina Public Service Workers Union held a statewide protest over the price hikes, which they characterized as “attacks on the State Health Plan.”
“As public workers,” union leader Charles Owens said in a statement, “we aren’t being taken care of by our lawmakers.”
While Briner frames the monthly increases as a necessary measure to save the health plan, Walker Kelly sees it as a financial burden on those who receive coverage.
“A $20 increase is significantly high, especially when we are talking about educators who have not seen a significant increase in their base pay from the state of North Carolina in quite some time,” she said. “Twenty dollars is whether or not I can put gas in my car to take myself to and from work.
“It may seem like a relatively low number on paper, but it provides significant challenges to the economic well-being of our educators throughout the state.”
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