NC State Health Plan to vote Friday on 2026 premium increases

Changes aimed at addressing financial shortfalls continue for the hundreds of thousands of state employees, retirees and their family members enrolled in the North Carolina State Health Plan, whose board is set to vote Friday on premium increases for 2026.

The meeting is open to the public and will be held at the treasurer’s office at 3200 Atlantic Ave. from 9:30 a.m. to noon.

The exact premium increases have not yet been released, but State Treasurer Brad Briner has said that premium increases will be tiered, with those who earn the least seeing less of an increase in premiums.

Higher deductibles and other plan design changes were approved for 2026 during a State Health Plan Board of Trustees vote in May.

The vote comes ahead of open enrollment beginning in October. It follows the passage of House Bill 125, which includes $100 million for the State Health Plan. That bill served as a limited budget bill, as lawmakers in the Senate and House — both led by Republicans — have not yet agreed on a full budget. Democratic Gov. Josh Stein has signed that mini-budget bill into law.

“We are grateful to the General Assembly for their agreement to provide a historic investment into the State Health Plan and for fully funding the pension plan,” Briner said in a news release following passage of the bill by the General Assembly.

“We have been working hard to overcome the $500 million deficit in the Plan, and these funds are critical to making the Plan solvent for our hard-working state employees,” he said.

In a video posted prior to the vote on the premium increases, Briner said that for seven years, premiums haven’t increased despite health care costs rising over 25%. The plan used cash reserves to cover the gap, but those funds are nearly depleted, he said. With a projected $500 million deficit in 2026, he warned that without action, the state employee health plan could cease to exist in its current form.

Briner said two key factors led to the state’s situation. First, the plan has been spending more than it brings in. Claims have grown an average of 5.7% annually, compared to just 3.3% growth in funding, he said. It’s particularly the plan members who aren’t served by Medicare who are driving that increase in claims.

He said the second factor was the state’s Clear Pricing Project, initiated under former Treasurer Dale Folwell, not being effective. The CPP is being ended at the end of this year.

Folwell implemented the project in 2019, pegging reimbursement rates to hospitals that joined the plan to Medicare payments plus a markup. State Health Plan members pay nothing for visits to a CPP primary care or behavioral health provider. Briner has said the CPP has drawn providers which otherwise would be paid less than its CPP rates, while those paid more have stayed out.

Folwell, who also often spoke about difficulties in keeping the plan afloat, did not raise premiums. Instead, he often called on the General Assembly to help keep the plan solvent and spoke out against hospitals and other health care players.

The expected premium raises are not the only changes aimed at lowering costs.

In 2026, a new preferred provider program will begin, said Briner in his video.

Briner said in his video if a member visits a doctor or health care practice “identified as being committed to improving access to high-quality, affordable health care” by the plan, they will pay the lowest copay for an office visit. He also said that the plan would be lowering monthly premiums for adding children to the plan.

Starting in October, the North Carolina State Health Plan will also offer certain surgeries at no cost for 550,000 active members through a new partnership with Lantern, a specialty care platform.

Lantern already works with 11 North Carolina employers, including Harris Teeter. It serves more than 6 million people nationwide, and has experience with large plan sponsors, including Fortune 500 companies and public-sector clients such as Florida’s Department of Management Services, Alaska’s Department of Administration and the State of Delaware, according to Lantern’s CEO John Zutter, who shared information on its program with The News & Observer in late July.

Briner told The N&O during an interview in late July that the board’s first priority was stabilizing the plan’s 2026 finances.

Then, he said, it’s necessary to make the plan sustainable long-term by “injecting competition” and working towards transparent pricing. The surgical program is the first step in that effort and will save the plan money, he said.

The benefit targets nonemergency procedures where patients have time to compare options and where multiple providers compete for business. “The bargain that we’re seeking to strike here is to bring a lot of volume to a high-quality provider, get a discount for the plan for that and, most importantly, provide members with a much better deal than they can get right now,” Briner said.

Roughly 1,500 procedures will be covered under the program, which will run through Aetna, the plan’s third-party administrator. When members need nonemergency surgery, Aetna will pass their information to Lantern, which will contact them with options for no-cost procedures. Lantern’s network includes OrthoCarolina, Raleigh Orthopaedic and Pinehurst Surgical Clinic.

Zutter told the N&O in an email that Lantern builds its network through a rigorous vetting process, focused on finding quality providers, and also works with leading medical centers such as Cleveland Clinic, Johns Hopkins and Mayo Clinic. The quality process is overseen by Chief Medical Officer Jason Tibbels, who serves on the National Committee for Quality Assurance Standards Committee, a leading standards and accreditation body for U.S. health plans.

Briner said talks are underway with major systems like Duke Health and UNC Health. He hopes providers will see the value in joining but acknowledged the risk that some may not bid.

Payments to participating providers will be “substantially less” than Aetna’s rates, Briner said. Bidding to join the network will continue even after the program launches in the fall.

“We select top tier doctors and facilities and negotiate and steer our members accordingly,” Zutter said. “This allows us to create more competitive tension” and realize savings for clients and partners, he said.

Since the Lantern partnership came through Aetna, it didn’t require a separate bidding process, said Beth Horner, State Health Plan chief of staff.

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