The health plan that covers hundreds of thousands of state workers, retirees and their family members faces significant shortfalls – and the inability to pay – for years to come. Now planning staff is trying to find a way to close the gap. The solution may include raising the fees of some members.
The National Health Plan is facing a loss of $106.3 million for the 2023-24 fiscal year, according to State Treasurer Dale Folwell, chairman of the health plan’s board. And the plan has spent a lot of money to cover annual expenses. The minimum amount the plan needs to pay for services is projected to fall below the plan’s required threshold by 2026, according to Folwell.
“We have one epidemic of not being able to pay our debts,” Folwell said Tuesday during a regular monthly video call with reporters.
The North Carolina State Health Plan Board requires an insurance plan to maintain year-end savings that exceed the estimated cost of services already provided to its members.
But the expected increase in the cost of pharmaceuticals and health services threatens to eat into its budget if the plan does not cut costs or find ways to increase revenue, according to the health plan’s proposal released last month.
Planning staff predicts a net loss of $439 million in calendar year 2026 and another loss of $824 million in calendar year 2027. Without implementation, the proposal said, the plan “you probably won’t be able to pay the bills in the fall of 2026.”
Costs related to Covid-19 cost the plan $528 million — about 60% of which has not been reimbursed by the General Assembly, according to Folwell. He said the state’s latest budget funded the plan $240 million less than needed.
In addition to saying that state legislators have changed the National Health Policy regarding the reimbursement of the Covid period, Folwell has also spent years asking the legislature to invest more money in the health plan. Those pleas have largely fallen on deaf ears in the Republican-controlled General Assembly — even though Folwell, a longtime Republican, served as the leader of the 2nd state House before becoming treasurer after the election. of 2016.
In the face of financial pressures, the health plan has worked to reduce administrative costs. But Folwell says legal aid is needed more than that. Despite sitting on a $1 billion surplus, the Republican-controlled legislature has yet to commit to spending more money on the health plan.
“We need them to fully fund a cost-based federal health plan. Time,” Folwell said Tuesday. And that’s a long-term solution.
A spokesman for Senate leader Phil Berger did not immediately respond to a request for comment.
Folwell said: “This is not a crisis that will go away. “And it will eventually affect those who teach, protect and serve. That’s why we want a real, honest, open, statistical discussion. about where the national health plan is going.”
Currently, the plan continues to focus on cost savings and is considering ways to raise prices without losing the 740,000 state employees and family members who receive their health care through the state plan.
Health plan regulators this year dropped coverage for expensive GLP-1 drugs like Wegovy and Saxenda aimed at weight loss. Spending on the two drugs was projected to exceed $170 million by 2024, jumping to more than $1 billion over the next six years. Continued coverage would have forced the plan to double its monthly premiums for many members, Folwell said.
Folwell has sought to negotiate lower prices with drugmakers while trying to pressure lawmakers to get involved. Last week, he sent a letter to the Biden administration’s top policy official, Xavier Becerra, accusing drug companies of being involved in price gouging.
In June, health plan administrators voted to increase premiums for 26,000 people in their Medicare Advantage plan — a move that will affect 4,200 retirees who were not covered by a health plan, and aside, 22,000 people dependent on workers for the benefit year of 2025. The system was necessary, planning officials said, to reduce the increase in costs that followed the new federal rules and regulations.
Members enrolled in the Medicare Advantage Base Plan are expected to see their premiums increase by $33 per month starting Jan. 1. Without the increase, the health plan faced a $1.5 billion funding gap over the next three years, according to Folwell. Some Medicare Advantage enrollees could see premiums rise to $159 by 2027, according to the state’s health plan.
However, sometimes, price increases can have a diminishing effect. If the prices are too high, some qualified government employees or their family members may leave, and that depletes the pool as a whole.
“There are a lot of federal workers who have dependents who are uninsured because they can’t afford family services,” Folwell said. “They can’t make a choice – especially at this price point – between health care and food, health care and heat, health care and mortgage or health care and health see.”
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