Hundreds of thousands of state government employees, retirees and their families will soon be paying more for health care via the State Health Plan. But they’ll be seeing new benefits and perks, too, including less time spent fighting with insurance to get approval for care.
The health plan will be overhauled in the course of two votes this year. The first vote, which passed Tuesday, dealt with changes to benefits that members will receive starting in the next year or two. The second vote, scheduled for August, is expected to cement the higher costs.
It all comes as rising health care costs — fueled by people living longer, higher prescription drug spending and other factors — has left the State Health Plan facing a $500 million shortfall. State lawmakers appear likely, as part of this year’s budget negotiations, to fund some but not all of that cost. So the rest will fall on the members themselves.
Deductibles will double for some, premiums could potentially more than double, and people on the plan will also find themselves paying more for prescriptions, primary care visits and other costs — if the numbers that were made public Tuesday are approved in the August vote.
However, the out-of-pocket-maximum will stay the same for nearly all of the 750,000 people on the State Health Plan. And the vote taken Tuesday will also create a new approach to surgeries. Plan leaders say that, if it works, it could lead to members paying close to $0 for a surgery that previously would’ve cost thousands of dollars.
State Treasurer Brad Briner, a Republican who won election in 2024, announced shortly after taking office that he’d look to implement a tiered system for premiums in which highly paid state workers see their premiums go up more, while more lower-paid state employees see only a small increase to their premiums. He told WRAL in an interview Tuesday that keeping the out-of-pocket maximum the same, even as other costs increased, was another key goal.
“For our sickest members, that is an important benefit preservation that we thought was worth prioritizing,” Briner said.
70/30 plan: People on the more basic plan — which is currently called the 70/30 plan but which will soon see its name change to “Standard” — would see their premiums increase from $25 per month to as much as $70 per month, depending on their salary. Single members would see their deductible rise from $1,500 to $3,000, and families would see their deductibles rise frm $4,500 to $9,000.
80/20 plan: People on the more robust plan — currently called 80/20 but which will soon see its name change to “Plus” — will see their premiums rise from $50 a month to as much as $130 per month, depending on their salary. Single members would see their deductible rise from $1,250 to $1,500, and families would see their deductibles rise frm $3,750 to $4,500.
Medicare: Older state employees and reitrees on the state’s Medicare advantage plan would see almost no changes to what they pay, with just a $100 increase to their annual out-of-pocket maximum. People on the Medicare 70/30 plan would see large increases to what they pay, however. That’s an intentional move by State Health Plan leadership, which is hoping to drive qualifying people to the Medicare advantage plan.
Effects on members
The vote on the premiums is scheduled for later this summer because the State Health Plan’s leaders have been waiting to see how much money the state legislature will give them in the new state budget.
The budget hasn’t become law yet, but as of Monday the House of Representatives and the Senate have now both proposed spending the same amount of money on the State Health Plan — a boost to past spending, but still not enough to cover the plan’s $500 million shortfall. That means people on the plan are going to have to start paying more.
Dr. Brad Miller, a member of the health plan’s board of directors, said that even after the proposed hikes laid out Tuesday, most state employees will still be paying a far smaller premium than most people who have insurance in private-sector jobs. That’s how it should be, he added, since the state’s good health benefits are a key recruiting tool.
But not everyone was pleased.
Tamika Walker Kelly, who leads the North Carolina Association of Educators, asked the board Tuesday to commit not to raise premiums, a move she said would put pressure on the legislature to put more money into the health plan.
“This burden shouldn’t fall on the backs of underpaid public employees,” she said. “The legislature and our health plan partners must be asked to do more. … Raising premiums on state employees today absolves lawmakers of their responsibility, and fails to protect the future of the State of North Carolina.”
Thomas Friedman, the executive director of the health plan, said it’s notable that the legislature appears willing to give the State Health Plan any extra funding, since both the House and Senate are pushing to lower spending in many parts of state government as they look to pay for further tax cuts.
“Given how little the overall state budget increased, we are a substantial piece of that,” he said, later adding: “You hear time to time the legislature’s not doing their part. But that is fundamentally untrue, in my opinion.”
As for the benefit changes approved Tuesday, some are aimed at keeping people healthy in the first place, or to keep them from needing to go back to the hospital after a big procedure — such as heart health monitoring for people in rural areas with limited local hospital options, and a pilot progam that will be rolled out in more remote areas of western North Carolina, to ship fresh fruit and vegetables to state workers who live in areas without grocery stores nearby.
Surgeries for free?
There’s also an ambitious plan to drastically change how people get surgeries, colonscopies and other procedures. Plan leaders hope that if it works as intended, they’ll be able to cut their own costs, make surgeries nearly free, and do it all without stiffing doctors.
The State Health Plan will identify certain doctors as high-quality options and give them the option to become a preferred provider. Those preferred doctors would then be given a green light to conduct work without needing to sek prior authorization from Aetna, the insurance company that State Health Plan members are on. They’d receive less money than they currently do from the State Health Plan — but still substantially more than they’d make from Medicare — and they’d be guaranteed certain monthly payments from the State Health Plan, to bundle together services for people on the plan.
The idea is to create a win-win situation for everyone involved: Doctors agreeing to be in the program would get stable, guaranteed income and a steady stream of patients being referred to them. The State Health Plan would save large amounts of money by lowering how much it pays for procedures. Those savings would then be passed onto State Health Plan members in the form of drastic price reductions for surgeries. And doctors and patients alike wouldn’t have the frustration and hassle of fighting with insurance on whether something will be covered or not.
“Basic economic principles, it makes sense,” Briner said in an interview. “If we can give those providers a lot more volume, they can give us a lower price. And they’re better off, and so are we. So that’s the trade we’re trying to make.”
People whose normal doctors aren’t part of that new network for the bundled care would be allowed to keep going to their doctor, but they might have to pay normal costs to do so — costs that, with the rising deductibles, could go up substatially if they’re not already hitting their out-of-pocket maximum.
Some members of the health plan may be fine with finding a new doctor, however, if it means not having to deal with prior authorization from insurance to get work done. During the public comment section of Tuesday’s meeting a Vance County Schools employee, Albert Ellis, came to say that he had fought to have a shoulder surgery approved, only to have it denied over and over— until he told Aetna he was going to come to this meeting to tell his story.
“Miraculously, when I told them I was coming here, I got a letter saying they had approved my claim,” he said.
Aetna took over the State Health Plan this year after a legal battle that saw them oust Blue Cross Blue Shield for the multibilion-dollar contract. It came after former Treasurer Dale Folwell had publicly feuded with Blue Cross for years.
State Health Plan leaders weren’t critical Tuesday of Aetna’s performance in the company’s first year administering the plan, despite their plan to make the company less involved in decisions. An Aetna spokesman told WRAL the company looks forward to helping the State Health Plan in its attempts to keep cost low.
“Aetna is honored to serve as the third-party administrator for the North Carolina State Health Plan and its members,” spokesman Phil Blando said. “In this role, we implement the Plan’s policy choices and benefit design on behalf of North Carolina’s public servants. We are proud partners to the state in helping put the State Health Plan on a financially sustainable path.”
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