(The Center Square) – North Carolina treasurer Dale Folwell is sounding the alarm on the financial health of the state employee health care plan.
Folwell this week called the health insurance plan “on the brink of insolvency” due to rising health care costs which have created a $106.3 million shortfall.
Also, the state Legislature still has not reimbursed the plan for $250 million spent on COVID-19 related expenses, the treasurer said.
“This is not a crisis that is going away,” he said. “Ultimately, it’s going to touch those who teach, protect and serve. We look forward to a very honest, open, mathematical conversation about where the state health plan is going forward.”
Funding from the General Assembly is not keeping pace with the rise of health care and prescription drugs, Folwell said.
“Prescription and health costs are going up at least twice a higher rate than the amount of funding that the General Assembly has chosen to give us,” Folwell said.
Although the state was awarded federal grants for COVID-19 related expenses, the Legislature has not passed on all of those funds the the health care plan, the treasurer added. Each chamber is not scheduled to reconvene until Sept. 9.
“The plan can only pay its bills based on the premiums we receive and the appropriations we receive from the General Assembly,” the two-term Republican said.
The state health care plan has “done everything humanly possible” to cut administrative expenses, Folwell said.
“What it means is that the General Assembly will have to put more money in the plan like it has had to do at times in the past,” Folwell said.
The plan has used cash reserves to make up the shortfall but faces “imminent insolvency” with projections showing the reserves will fall below the required threshold by 2026, said Folwell.
“The money has to come from somewhere,” Folwell said. “We have a lot of state employees who are having to work one week out of four to pay the family premium. Going on premiums for those who are already struggling, I don’t think is the answer.”
In addition, the state is facing tens of millions of dollars in expected cost from the Medicare Advantage program for state employees because of a change in federal legislation, the treasurer said.
Ultimately, Folwell said, the best long-term solution is to lower the cost of health care in North Carolina, including negotiating with hospitals for lower pricing.
