Rising costs in N.C.'s state health plan
Teachers and state workers say fees are rising in health plan that covers 750,000 people, or 8% of the state’s insured population
The following article appeared in the Feb. 7, 2025, edition of The Charlotte Ledger, an e-newsletter with smart and original local news for Charlotte. We offer free and paid subscription plans. More info here.
As the State Health Plan grapples with a multi-million-dollar deficit, its challenges highlight the high cost of health care across the state
Local teachers and other state employees say they are paying more out-of-pocket for health expenses after the State Health Plan switched from Blue Cross Blue Shield of North Carolina to national insurance giant Aetna. The plan is the largest in the state, covering about 8% of North Carolina’s insured population.
By Michelle Crouch
Co-published with N.C. Health News
Teachers and state workers have long counted on better-than-average health benefits to help make up for the lower pay and demands of their government jobs. But now, some say it feels like that once-reliable perk is slipping away.
Just days into his tenure, newly elected State Treasurer Brad Briner warned that rising health care costs could drive up premiums for the State Health Plan in 2026.
Then, on Thursday, his office announced that the plan’s board will decide at a meeting today whether to set salary-based premiums — meaning higher earners would pay more for their health care.
The news comes as some members are already coping with another change: higher out-of-pocket costs following the plan’s switch this year from long-time plan administrator Blue Cross Blue Shield of North Carolina to national insurance giant Aetna.
One Charlotte teacher said her copay has doubled from $40 to $80 for visits to her ear, nose and throat specialist. Others report paying more for everything from physical therapy to mental health services. Social media pages for teachers have lit up with threads filled with employees making complaints.
Amanda Thompson, president of the Charlotte-Mecklenburg Association of Educators, said many teachers were caught off guard by the higher copays, because they were told that little would change under the transition to Aetna.
“They’re paying more for infusions, for appointments,” she said. “That’s unfortunate because our paychecks already aren’t rising with the cost of inflation.”
Struggling to keep up
The self-insured State Health Plan covers 750,000 people across North Carolina, about 8% of the state’s insured population.
Like private and marketplace health plans, the State Health Plan has been struggling to keep up with skyrocketing health care costs.
Forbes Advisor recently ranked North Carolina the most expensive state in the nation for health care, something that’s captured attention from policy makers in Raleigh, even as other rankings place North Carolina further down the list. The analysis also showed that the state has the second-highest average premium for residents with family health insurance coverage through an employer, at $7,180 annually.
A survey published this week by the nonprofit United States of Care found that 80% of N.C. residents believe the state’s health costs are higher than they need to be, with nearly 75% saying they’ve taken steps to reduce out-of-pocket medical costs — such as delaying going to the doctor or skipping a medical test or procedure — that could negatively impact their health.
Bryan Proffitt, vice president of North Carolina Association of Educators, said when he asked teachers across the state for feedback on the transition to Aetna, he received 50 responses in 14 hours — none of them positive.
“They are finding out that services that used to be free or lower cost, cost more,” he said. “It’s impacting lives pretty significantly right now.”
The higher copays appear to be the result of fewer health care providers across the state opting to participate in the Clear Pricing Project (CPP), a program within the health plan designed to keep costs low for state employees.
But the State Health Plan faces an even bigger problem: a projected $507 million deficit in 2026, with a shortfall that could reach $1.4 billion by 2027.
At today’s meeting, the State Health Plan’s board will start talking about how to close the gap.
Is more transparency the solution?
Briner has already acknowledged that some tough decisions may need to be made. In addition to discussing the tiered premiums based on salary, he has said the board could consider switching the plan to generic drugs or scaling back retiree benefits.
“Everything is on the table,” Briner said at a recent press conference.
Ardis Watkins, executive director of the State Employees Association of North Carolina, said before raising premiums, Briner should push to expose the secret contracts between the State Health Plan and health care providers.
Watkins said some hospitals charge about 800% above Medicare reimbursement rates — or 9 times more — but those prices are hidden under a trade secrets exception to the public records law. Allowing the public to see how much providers are charging for care would drive prices down, she said.
Briner said he favors price transparency in health care, but he emphasized the need for collaboration. Although the State Health Plan is a big payer that can help shape the conversation, he said it alone can’t drive change.
“We have to work with all the stakeholders, all the payers, to try to do that,” he said.
Briner said his goal is to push for a market-based system where patients can compare prices and quality before choosing care.
The fact that a payer as large as the State Health Plan is struggling with rising costs underscores the depth of North Carolina’s affordability problem, said Ciara Zachary, an assistant professor in health policy and management at the UNC Gillings School of Global Public Health.
Zachary said a variety of factors are likely driving up costs, but the large number of health care mergers and acquisitions in recent years has no doubt played a role.
Michelle Crouch covers health care. Reach her at mcrouch@northcarolinahealthnews.org.
This article is part of a partnership between The Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area.
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