Thomas Friedman, executive administrator of the State Health Plan, state Treasurer Brad Briner, and state budget director Kristin Walker at the state health plan trustees meeting, March 7, 2025 (Photo: Lynn Bonner)
State employees are criticizing plans to make their health insurance more expensive, saying options officials are considering will hurt hiring and recruitment efforts and tarnish a benefit of working for the state.
The State Health Plan spends more money than it takes in. Its Board of Trustees is considering ways to prevent insolvency.
State Treasurer Brad Briner is asking the health plan trustees to raise $500 million so it doesn’t run out of money next year. His office has also asked the legislature to increase state contributions by 5% each year over the next two years for covered employees. That would amount to $97 million in the first year.
The health plan’s deficit is $1.4 billion over two years.
The plan’s Board of Trustees is considering how to balance proposed higher health insurance premiums with other increases to employees’ out-of-pocket costs to help fill that hole.
State Treasurer Brad Briner said the move was akin to “putting out a fire.” Without action, the health plan will run out of money at the end of 2026, he said.
Briner said he knows no one wants costs to go up. The health plan held premiums and out-of-pocket costs flat for seven years by dipping into reserves, he said, and cannot do it anymore. “Unfortunately, we are now out of reserves,” Briner said.
Health plan administrators have proposed salary-based premium increases, with a maximum $20 per month increase for the lowest-paid employees. Other changes, such as higher deductibles and increases to out-of-pocket maximums, are also in the mix.
After reworking the health benefits plans, administrators will look to cost savings from hospitals to help cover the following year’s shortfall.
Trustees discussed options at a Friday meeting, but won’t vote on a final plan until May. The board plans to set premiums in August.
State employees told trustees the increases would be unaffordable. The state health insurance plan covers about 700,000 state employees, teachers, and dependents.
“As a state employee, we see having a decent health insurance plan as a buffer to low wages,” said Karina Hernandez, a licensed clinical social worker at Butner’s Central Regional Hospital, one of the state’s three psychiatric hospitals. “We don’t have many perks,” said Hernandez, a member of UE Local 150, the North Carolina Public Service Workers Union. “Health insurance is important to us.”
Kevin Thompkins, executive director of Human Resources at Vance-Granville Community College, said the plan should have five or six salary tiers to distinguish between middle-income and high earners.
It’s hard to hire full-time community college faculty, Thompkins said. Many in-demand specialists can make more money elsewhere.
“One of the big recruiting things we have are the pension and the State Health Plan,” he said. Increasing premiums and deductibles would seriously hinder the ability to hire and retain employees, he said.
While the treasurer’s office is looking to find savings from hospitals in the next stage of its plan to address the deficit, the State Employees Association of North Carolina wanted to look first at lowering hospital costs.
SEANC’s Suzanne Beasley told trustees it would be critical to make public how much hospitals are making before they look to employees to pay more.
SEANC has been pushing for contract transparency so the public can know how much the health plan pays hospitals.
“State employees know that they are the low-hanging fruit you’re always going to pick first,” she said.
Dr. Kerry Willis, a trustee with a North Carolina medical practice, cautioned against big increases in out-of-pocket maximum costs, which could discourage people with chronic illnesses from seeking medical care.
He doubted changing insurance benefits would save money. “We’ll save money looking at hospital costs and capping those,” he said.
The board does need to look at hospital costs, said Dr. Brian Miller, a trustee who is a hospitalist and researcher at Johns Hopkins University. The immediate focus is on benefits because they have to do something fast, he said.
“Hospital contracts are not a fast process,” Miller said. “Next year, we’ll have other tools, including hospital costs. We’ll have more lead time.”