
NORTH CAROLINA — The state’s chief fiduciary is considering options — including premium increases — to ensure financial sustainability in the state health plan. Former treasurer Dale Folwell held down premium hikes during his eight-year tenure, but repeatedly warned the plan’s long-term solvency required a broader strategy to address surging healthcare costs.
The new State Treasurer Brad Briner is chair of the 10-member North Carolina State Health Plan Board of Trustees. It is responsible for approving premium rates, co-pays, large contracts, benefit programs, and strategic planning for nearly 740,000 active and retired state employees covered under the State Health Plan.
The plan covers 12,128 members in New Hanover County, 5,883 members in Brunswick County, and 3,391 members in Pender County, according to a June report. New Hanover Regional Medical Center, bought by Novant in 2021, received $37.8 million from the plan in 2022, the tenth largest amount among state hospitals.
In a press release this week, Briner noted the plan is facing a $507-million deficit, expected to grow to $1.4 billion by 2027. He stated his first priority is stabilizing finances followed by building cash reserves, improving transparency, and working on innovative programming with providers.
“We will be forced to make some hard decisions as we look ahead to 2026,” Briner wrote, “which may include increased premiums for the first time in seven years for our active members.”
The treasurer’s office is looking into how to reduce the impact of premium hikes on low-income members, Briner noted. While state appropriations cover most of the costs for active and retired members, those enrolled must cover dependents separately. A 2021 State Health Plan report found family premium costs for low-paid positions such as starting teachers, troopers, and maintenance workers equal five days of income per month.
Port City Daily reached out to Briner to ask his view on root causes of the State Health Plan’s insolvency and if he will pursue increased oversight and transparency of nonprofit hospitals but he was unavailable for comment by press.
A November State Health Plan work plan provided possible means of addressing the budget gap, including increased member contributions, broader appropriations from the general assembly, and greater oversight for drug costs.
Dale Folwell — who served as treasurer from 2016 to 2024 — repeatedly raised concerns about the plan’s solvency during his time in office. The treasurer’s office and the NC State Health Plan published multiple studies finding North Carolina’s nonprofit hospitals increased state health plan costs by charging excessive amounts for drugs despite federal subsidies, providing inadequate charity care, contributing to market monopolization, and disproportionate executive compensation.
“The problem is we have a cartel,” Folwell told Port City Daily Wednesday. “And the cartel is the reason the state health plan is in the situation it’s in.”
Health care costs in North Carolina are around $112.6 billion per year with state health plan members accounting for around 7% of that total. Forbes ranks North Carolina as the worst among 50 states for healthcare costs and third to worst in terms of overall healthcare.
A 2021 state health plan report found hospitals in the Tar Heel State were over three times more profitable than the national average in 2019, despite more than 85% of them being nonprofits. A study last year found NC hospitals profited by overcharging state health plan members and other patients’ cancer drugs despite receiving a discount from the federal government.
“Hospital price increases have endangered the future of the state’s health care benefit for teachers, law enforcement, and other public sector workers,” the State Health Plan wrote in a 2022 report.
Folwell launched the “Clear Pricing Project” in 2019 aimed at increasing cost transparency by tying all State Health Plan payments to a standard reimbursement rate through Medicare rather than confidential fee schedules with Blue Cross Blue Shield. The State Employees Association of North Carolina supported the proposal but it failed to garner sufficient support among lawmakers and providers; the North Carolina Healthcare Association argued it would unfairly decrease revenue and limit services.
“The North Carolina Healthcare Association believes that a collaborative approach is most productive,” a NCHA spokesperson told Port City Daily Wednesday. “We look forward to working with Treasurer Briner to develop solutions that can effectively bring down costs in the long term and help improve the health of state employees.”
Former Rep. Josh Dobson — who served as Labor Commissioner from 2020 to 2024 — sponsored legislation against Folwell’s initiative six years ago. Dobson’s campaign received large donations from the hospital, pharmaceutical, and health insurance industries during his time in office, including $18,700 from the NCHA and $5,750 from Blue Cross Blue Shield. The North Carolina Healthcare Association lobby group named him president and CEO in November.
“Josh Dobson was a member of the House who filed a bill to stop what we were trying to do to keep the state health plan solvent,” Folwell said. “Now he is making probably millions as the head of the organization that was in charge of that.”
In August Folwell requested $250 million from the General Assembly to maintain immediate solvency. The State Health Plan Board of Trustees took other actions to reduce costs last year, such as dropping high-cost weight loss drugs and opening an investigation into CVS Caremark, its pharmacy benefit manager, in April. A July Federal Trade Commission study described pharmacy benefit managers as “powerful middlemen [that] may be profiting by inflating drug costs.”
“If somebody buys Wegovy for $100 and it costs my teachers $1,300,” Folwell said, “and it costs less than $50 to make, that’s a tax. Real conservatives should be against taxes. That’s why myself and Bernie Sanders discuss this issue. He’s a liberal, he’s trying to liberate people from being under siege of higher drug costs.”
Port City Daily reached out to local elected officials to ask their view on state health plan solvency concerns and if they would support appropriating additional funds to cover the deficit. Only Rep. Ted Davis (R-New Hanover) responded that he was looking into the issue.
John Hopkins healthcare accounting expert Ge Bai argued achieving long-term state health plan solvency will require regulatory changes to reduce market concentration — such as Certificate of Need reform — and address misaligned incentives to increase costs included in North Carolina’s Medicaid expansion and debt relief programs.
“People want to paint hospitals as the bad guy,” she told Port City Daily Tuesday, “but hospitals just respond to incentives.”
Bai peer-reviewed the state treasurer and National Academy of State Health Policy’s 2022 audit of NC’s seven largest hospitals finding they provided less in charity care — free or reduced medical services used to justify nonprofit status — than they received in tax breaks. The former state treasurer advocated greater accountability and oversight of nonprofit hospitals to prevent the misdirection of taxpayer resources.
“How I saw things and how the new treasurer sees things could be different,” Folwell said. “But there can also only be one treasurer at a time.”
Tips or comments? Email peter@portcitydaily.com
Want to read more from PCD? Subscribe now and then sign up for our morning newsletter, Wilmington Wire, and get the headlines delivered to your inbox every morning.