State Health Plan board OKs 2026 premium hikes

About 300,000 state government employees now know how much their 2026 health insurance premiums will be as members of the State Health Plan.

The plan's Board of Trustees approved Friday tier-based monthly premium rates for the standard and plus PPO plans, with those with higher annual base salaries paying more.

The SHP is North Carolina's largest purchaser of medical and pharmaceutical services. It covers nearly 750,000 teachers, state employees, legislators, retirees and their dependents.

The approved premiums include increases for active members, along with a cost reduction for some employees with children on their plan.

There will no longer be a lower premium cost for those who do not consume tobacco products.

The 2026 open enrollment period for SHP participants takes place Oct. 13-31.

"Today's vote was not easy, but these increases were necessary to keep the plan solvent and to keep this benefit in place for those that serve and have served the state of North Carolina," said Treasurer Brad Briner, who chairs the SHP board.

"The goal now is to move forward and focus on ways to improve benefits through transparency, and better partnerships and programs to keep our members healthy."

The board has said the planned premium, higher deductible and co-pay increases will play a crucial role in shrinking the plan's $507 million deficit.

Particular areas of cost-cutting focus are orthopedic surgery, surgical eye care, maternity care and weight-loss medication.

"Active plan members have seen little change in premiums or benefits for the last seven years, in part because the plan used cash reserves to keep premiums flat while costs continued to rise," according to the news release.

"Those cash reserves are now nearly depleted ... this prompted necessary, immediate action. The plan is now headed toward a more financially sustainable path."

The board said the premium rate hikes could have been larger if not for the Republican-controlled General Assembly approving a ministate budget bill that provides an additional $150 million to the SHP for fiscal 2025-26.

Public speakers before the vote said that participants should not bear the biggest burden for reducing the SHP deficit even as some recognized the necessity of rate increases.

They urged the legislature to increase its annual contributions to the SHP so that whatever raises employees get out of the 2025-26 state budget don't get swallowed up by the premium hike. They also urged the SHP board to be more proactive in pushing back against health insurers' cost increases.

The majority of SHP participants will become eligible in October for "an innovative no-cost surgical benefit" through a new partnership with a Dallas-based healthcare network.

Briner said the plan involves Lantern, a Specialty Care Platform, and a network of surgeons and specialists it is assembling in North Carolina that includes the Triad.

Medicare recipients are not eligible, which reduces the number of potential participants to about 550,000.

Standard PPO plan rates

For the standard PPO 70/30 plan with a higher deductible, an employee-only monthly premium rate would be $35 for someone making up to $50,000, as well as $50 for those in the $50,001 to $65,000 range, $65 for those in the $65,001 to $90,000 range, and $80 for those making at least $90,001.

The monthly premium cost for an employee and children is: $185 for someone making up to $50,000; $200 for those in the $50,001 to $65,000 range; $215 for those in the $65,001 to $90,000 range; and $230 for those making at least $90,001.

The monthly premium cost is the same for an employee and a spouse, and for an employee and family: $575 for someone making up to $50,000; $590 for those in the $50,001 to $65,000 range; $605 for those in the $65,001 to $90,000 range; and $620 for those making at least $90,001.

Plus PPO plan rates

For the Plus PPO 80/20 plan, an employee-only monthly premium rate would be $66 for someone making up to $50,000, as well as $94 for those in the $50,001 to $65,000 range, $122 for those in the $65,001 to $90,000 range, and $160 for those making at least $90,001.

The monthly premium cost for an employee and children is: $276 for someone making up to $50,000; $304 for those in the $50,001 to $65,000 range; $332 for those in the $65,001 to $90,000 range; and $370 for those making at least $90,001.

The monthly premium cost is the same for an employee and a spouse, and for an employee and family: $746 for someone making up to $50,000; $774 for those in the $50,001 to $65,000 range; $802 for those in the $65,001 to $90,000 range; and $840 for those making at least $90,001.

The SHP premium proposals also included separate monthly rates for Medicare and non-Medicare participants in the state retirement system

For non-Medicare participants, the standard PPO monthly premium is $0 for an individual retiree, $185 for retiree and children, and $575 for retiree and spouse, and for retire and family.

By comparison, the Plus PPO monthly premium is $66 for an individual retiree, $276 for retiree and children, and $746 for retiree and spouse, and for retiree and family.

Taking shots at Folwell

Briner made the SHP's precarious financial status a major focus of his 2024 campaign for the open state Treasurer.

Two-term Republican Treasurer Dale Folwell unsuccessfully ran for the 2024 Republican nomination for governor.

"We're going to take the last step to filling the hole by finalizing premiums," Briner said. "I know that few people are going to be happy about that, but it is necessary."

Briner then said "I'd like to spend a minute on how we got here. Simply put, we're here because of the short-sighted decisions by my predecessor."

"Premiums were frozen for years, and members were made to believe they could be that way forever. But the plan was actually spending more than it took in each and every year.

"That meant cash reserves were being used to keep prices stable, rather than doing the hard work with providers and making adjustments to get better services at lower prices for our members."

Briner called "flawed" Folwell's Clear Pricing Project that debuted in October 2018 with the goal of moving the SHP to a government pricing model tied to Medicare rates.

The CPP initiative stipulated that hospitals and medical providers that did not sign the CPP contract could have become out-of-network for SHP participants.

Folwell and SHP struggled mightily to get hospitals and providers to participate, as well as SHP participants to sign up.

Briner said the CPP initiative antagonized the state's healthcare systems and hospitals when collaboration should have been the goal for reducing medical costs for SHP participants. Tom Friedman, the SHP's executive administrator, cited Folwell's referral of those healthcare systems as "cartels" as hindering collaboration.

While Briner said the CPP had "an admirable" intent of providing pricing transparency to SHP participants.

But the end result, Briner said, was that the CPP "predictably led to higher expenses, and there were no cost savings in the program."

"It was another huge financial miscalculation."

Briner also called out Folwell for trying to place the blame solely on the legislature for not reimbursing the SHP for tens of millions of dollars for COVID-19 related expenses.

"Even if we had gotten every single possible dollar of expenses, we would still be in the position to have to raise premiums," Briner said.

Folwell could not be immediately reached for comment on Briner's remarks.

[email protected] 336-727-7376 @rcraverWSJ