Health insurance premiums for NC State Health Plan recipients will likely increase again in 2027, administrators said Monday.
If approved by the Health Plan's Board of Trustees, that would mark the second year in a row that the health plan will increase premiums after years of stability.
State Treasurer Brad Briner and health plan administrators have said that previous Treasurer Dale Folwell spent down reserves instead of increasing premiums. That option is no longer available, particularly because healthcare costs continue to steadily increase.
"We have been on a medical cost trend of almost 6% increases and a revenue trend to the state health plan of about 3% up each year. It is a basic problem: If your expenses are going up faster than your revenues, you're going to be in trouble sooner rather than later," Briner told reporters.
Health plan officials anticipate asking trustees to make further changes to benefit and increase premiums again for 2027, Executive Administrator Tom Friedman said Monday.
"I think both will be a lot smaller in terms of magnitude and scope than this past year. But while we are on significantly better financial footing — we're in the black in both '26 and '27 — there's continued work to do," Friedman said.
What had once been projected to be a $500 million deficit in 2026 and a $1.3 billion deficit in 2027 has turned around, Friedman said. Now, the Health Plan expects to have $30 million above its state-mandated reserve rate.
That's progress, Friedman said, but more is necessary.
Costs already going up
This year saw premiums increase for most members, with the health plan tying rates to an employee's income level.
"What we're trying to do is set premiums as a percentage of income and have them be very consistent as a percentage of income going forward," Briner said.
Earlier in the call, Briner had noted that employees making more than $90,000, who saw the steepest increases, were most likely to express alarm about the new premiums. The primary concern, Briner said, was that they would be paying more to receive the same coverage as someone earning a lower wage.
"While I understand that, we had a financial hole to solve. And in the end, we needed to ask people who could contribute more to contribute more," Briner said.
Employee advocates like the State Employees Association of North Carolina opposed this year's increases, particularly as they are coming without pay raises for state employees because the General Assembly has not passed a comprehensive budget for the current fiscal year.
One way health plan administrators are hoping to cut down on premiums is by finding lower-cost ways to provide care.
That could mean, for instance, providing an incentive for a beneficiary to go to a lower-cost freestanding imaging center instead of getting an MRI or CT scan done at a higher-cost facility, Friedman said.
"A lot of the strategy is that the future cost growth is going to be contingent on how successful we are at steering folks to lower-cost settings of care, and that's going to take some time to bear out," Friedman said.
Another program the Health Plan is using is its Lantern surgery benefit, which offers beneficiaries free surgeries as long as they use a pre-approved provider. The idea is that by steering all of its beneficiaries receiving a given procedure to specific providers, the State Health Plan will be able to negotiate lower rates with those providers based on economies of scale and by promising steady and predictable revenue.
The program starts "in earnest" in January, Friedman said, but more than 200 people have already used it to sign up for procedures.
"Where we're really going to be focused the next couple years is, where can help our members save money? And where will that help the State Health Plan save more money? ... We have a lot of providers really eager to work with us that are a lot cheaper and higher quality than kind of broad swath providers, and we're going to continue building out that structure," Friedman said.
If the approach works, Friedman said, premiums will increase more slowly and out-of-pocket costs for healthcare will decrease.
