By Michelle Crouch
Co-published with The Charlotte Ledger
Teachers and state workers have long counted on better-than-average health benefits to help make up for the lower pay and demands of their government jobs. But some say it feels like that once-reliable perk is slipping away.
Just days into his tenure, newly elected State Treasurer Brad Briner warned that rising health care costs could drive up premiums for the State Health Plan in 2026.
Then, on Thursday, his office announced that the plan’s board will decide at a meeting today whether to set salary-based premiums — meaning higher earners would pay more for their health care.
The news comes as some members are already coping with another change: higher out-of-pocket costs after the plan’s switch this year from longtime plan administrator Blue Cross Blue Shield of North Carolina to national insurance giant Aetna.
One Charlotte teacher said her copay has doubled from $40 to $80 for visits to her ear, nose and throat specialist. Others report paying more for everything from physical therapy to mental health services. Social media pages for teachers have lit up with threads filled with employees making complaints.
Amanda Thompson, president of the Charlotte-Mecklenburg Association of Educators, said many teachers were caught off guard by the higher copays because they were told that little would change under the transition to Aetna.
“They’re paying more for infusions, for appointments,” she said. “That’s unfortunate because our paychecks already aren’t rising with the cost of inflation.”
Struggling to keep up
The self-insured State Health Plan covers 750,000 people across North Carolina, about 8 percent of the state’s insured population.
Similar to issues in private and marketplace health plans, the State Health Plan has been struggling to keep up with skyrocketing health care costs.
Forbes Advisor recently ranked North Carolina the most expensive state in the nation for health care, something that’s captured attention from policy makers in Raleigh, even as other rankings place North Carolina further down the list. The Forbes analysis also showed that the state has the second-highest average premium for residents with family health insurance coverage through an employer, at $7,180 annually.
A survey published this week by the nonprofit United States of Care found that 80 percent of N.C. residents believe the state’s health costs are higher than they need to be, with nearly 75 percent saying they’ve taken steps to reduce out-of-pocket medical costs — such as delaying going to the doctor or skipping a medical test or procedure — that could negatively affect their health.
Bryan Proffitt, vice president of North Carolina Association of Educators, said when he asked teachers across the state for feedback on the transition to Aetna, he received 50 responses in 14 hours — none of them positive.
“They are finding out that services that used to be free or lower cost, cost more,” he said. “It’s impacting lives pretty significantly right now.”
The higher copays appear to be the result of fewer health care providers across the state opting to participate in the Clear Pricing Project, a program within the health plan designed to keep costs low for state employees.
But the State Health Plan faces an even bigger problem — a projected $507 million deficit in 2026, with a shortfall that could reach $1.4 billion by 2027.
At today’s meeting, the State Health Plan’s board will start talking about how to close the gap.
Is more transparency the solution?
Briner has already acknowledged that some tough decisions may need to be made. In addition to discussing the tiered premiums based on salary, he has said the board could consider switching the plan to generic drugs or scaling back retiree benefits.
“Everything is on the table,” Briner said at a recent news conference.
Ardis Watkins, executive director of the State Employees Association of North Carolina, said before raising premiums, Briner should push to expose the secret contracts between the State Health Plan and health care providers.
Watkins said some hospitals charge about 800 percent above Medicare reimbursement rates — or nine times more — but those prices are hidden under a trade secrets exception to the public records law. Allowing the public to see how much providers are charging for care would drive prices down, she said.
“All of the hospitals claim to be poor in the halls of the legislature,” Watkins said. “Once the public knows who we’re paying 800 percent to, and we can tie that to CEO salaries in the millions, then we’ll have something to work with.”
She said Briner should ask the legislature to make the contracts public. “The treasurer is in the driver’s seat … It’s a honeymoon period with the legislature,” she said.
Briner said he favors price transparency in health care, but he emphasized the need for collaboration. Although the State Health Plan is a big payer that can help shape the conversation, he said it alone can’t drive change.
“We have to work with all the stakeholders, all the payers, to try to do that,” he said.
Briner said his goal is to push for a market-based system where patients can compare prices and quality before choosing care.
“We’d like to use our skills and our scale as the State Health Plan to effect a better outcome for everyone, but we’re going to need everyone to play ball to do that — including, most likely, the legislature,” he said.
Mega-hospitals play a role
The fact that a payer as large as the State Health Plan is struggling with rising costs underscores the depth of North Carolina’s affordability problem, said Ciara Zachary, an assistant professor in health policy and management at the UNC Gillings School of Global Public Health.
Zachary said a variety of factors are likely driving up costs, but the large number of health care mergers and acquisitions in recent years has no doubt played a role.
Large hospitals can charge facility fees for care that takes place in doctors’ offices far from a hospital campus, and they have greater bargaining power in their negotiations with insurers.
“With the increasing power and size of health systems, insurers no longer have the leverage to say, ‘We’re not going to work with you,’” Zachary said.
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A few other states, like Montana, are trying to rein in costs with price caps or a strategy called reference-based pricing, Zachary said. That’s when a health plan sets fixed prices for each health care service instead of negotiating with providers.
Former state treasurer Dale Folwell pushed for a similar approach in North Carolina with his Clear Pricing Project, but he couldn’t get legislative support to make it mandatory, leaving it as an optional program.
Fewer providers in Clear Pricing Project
Aetna took over as the administrator of the State Health Plan on Jan. 1, overcoming a legal challenge from Blue Cross Blue Shield of North Carolina, which had managed the plan for more than 40 years until Folwell awarded the book of business to Aetna.
Aetna continued to offer providers the chance to sign up for the Clear Pricing Project, Briner said. The program pays doctors and other health care providers fixed rates based on a percentage above Medicare, rather than negotiated rates that aren’t publicly disclosed.
State employees and teachers who chose participating providers paid nothing or had copays that were half of the standard rate.
But with the switch to Aetna, members said many doctors, therapists and other providers who previously participated are no longer included.
Aetna referred questions about the program to the treasurer’s office.
The treasurer’s office told The Charlotte Ledger/NC Health News it couldn’t determine how many providers dropped out, because Aetna counts providers differently than Blue Cross Blue Shield.
Briner said his office is working to enroll a small number of providers who made good-faith efforts to meet the state’s deadlines. But he said many others had multiple opportunities to enroll, with deadlines in May, October and December — and simply chose not to sign up.
“As it relates to the large deficit the state health plan encounters, it is going to be very hard for us to spend more money with providers who ignored a series of deadlines,” he said.
Charlotte Eye Ear Nose & Throat Associates, which has more than 120 providers, was one of the practices that stopped participating.
Citing the “financial challenges of this inflationary period,” the practice said in a statement that it supported the Clear Pricing Project’s goal of pricing transparency, “but found the proposed contract terms unsustainable and therefore could not accept them.”
Clear Pricing Project may sunset
Briner said he couldn’t commit to continue the Clear Pricing Project beyond this year. In aggregate, he said, the program has cost the State Health Plan money. He added that because it isn’t mandatory, only those providers such as primary care and mental health providers who get paid more under the program tend to sign up. Meanwhile, other providers who already charged more than the program’s fixed rates skipped it.
Essentially, the plan gave lower-cost practices a boost, while failing to glean savings from the higher-priced providers.
“The CPP was well-intended,” Briner said. “But its enforcement mechanism left it with the predictable result.”
Proffitt, the educators’ association vice president, said the health plan board should look for other ways to balance the budget instead of shifting costs to public employees. But he said that given the erosion of public benefits in recent years, he’s not optimistic.
“There are always ways to close budget holes,” he said. “The state should not push the burden down on working class families and public school educators. People are already leaving the profession, and we will see more.”
This article is part of a partnership between The Charlotte Ledger and North Carolina Health News to produce original health care reporting focused on the Charlotte area.
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