North Carolina Treasurer Brad Briner has made waves during his first year in office among state employees, who will see a sharp uptick in their health insurance premiums starting next month.
Briner says the increase is necessary to address a shortfall in the North Carolina State Health Plan he found when he arrived.
Last year, Dale Folwell, the treasurer before Briner, told the plan’s trustees that if current trends continued, that deficit would be about a half billion dollars in 2026 and perhaps as large as a billion dollars in 2027.
Briner took a different tack this year, ending some programs that had been championed by Folwell. Instead of keeping monthly premiums flat, as Folwell had, Briner raised premiums for the roughly 750,000 state employees, retirees and their family members who are the beneficiaries.
Briner told the State Health Plan Board of Trustees earlier this month that the higher premiums, plus some other changes, had closed the projected deficit for 2026.
At that Dec. 5 meeting, actuaries from Segal Consulting gave a grim presentation that showed a deterioration in plan State Health Plan participants’ health since 2019. That trend doesn’t bode well for the long term financial health of the plan, Segal actuary Jason Jossie told meeting participants.
Costs will keep rising as members access more health care — unless something changes, Jossie said.
Pivoting to population health
State Health Plan head Tom Friedman suggested that one change should be how the plan nudges beneficiaries into healthier behaviors and into programs designed to more closely monitor chronic health conditions.
That approach, known as population health, is a decades-old concept that focuses on the health outcomes of a group of people. Those groups tend to have environmental, behavioral and social factors in common, like similar professions or communities. Data is gathered to better understand and target interventions to improve health outcomes.
In practical terms, it means that state employees will see some changes in the help they can get to manage their chronic diseases.
The State Health Plan has dabbled in population health before. For more than a decade, plan members had to attest as to whether or not they smoked or used tobacco, a major driver of heart and respiratory diseases, as well as cancer. When the idea was first rolled out, members would have been subject to saliva nicotine testing to confirm their use or non-use, but after members pushed back, the requirement became an annual attestation as to whether someone was a smoker or not.
If they admitted to smoking, they had to pay more of their insurance costs; they were also offered tobacco cessation counseling and nicotine replacement to help them quit.
The attestation requirement will sunset this year.
Instead, the plan’s leaders will focus on the chronic diseases that many plan members already have and help people manage them better.
High rates of chronic disease
At the Dec. 5 meeting, Jossie from the actuarial firm told board members that over the past six years, the number of members with chronic conditions has increased by more than 10 percent, despite the employee pool remaining relatively stable. Overall, members had higher rates of diabetes, high blood pressure, asthma, chronic respiratory disease, coronary artery disease and substance use than in 2019.
At the same time, the number of healthy members — those without chronic diseases — decreased by almost 23 percent, and outcomes were worse in rural areas.
During a presentation made to the board, Jossie showed that in 2024, at least 70 percent of plan members have at least one chronic health condition. Diabetes and obesity were particularly prevalent, with 54 percent of members diagnosed with one or the other, and often, both.
The number of people with catastrophic conditions had increased too.
“Of the top 10 conditions that are driving members to this catastrophic risk group, five of them are really directly related to diabetes and hypertension,” Jossie said. “The top one, chronic kidney disease, [and] heart failure — those are both the result of unmanaged diabetes and hypertension.”
“We are seeing a trend away from members not utilizing their benefits and being in that healthy risk group, to more and more chronic conditions and increases in members ending up in that catastrophic risk group or with cancer,” said Jason Jossie, an actuary from Segal Consulting, which advises the State Health Plan on insurance trends.
During the meeting, there was back-and-forth between Jossie and Friedman about what could have been a critical driver in the sharp decline in the health of plan participants.
“Members don’t end up in the catastrophic risk group within a year or two of bad lifestyle choices,” Jossie responded. “I mean, that’s a 20- to 30-year horizon of unmanaged conditions.”
“I think this is also the consequence of not investing in population health,” responded Friedman, a longtime health policy analyst who became executive director of the plan in January. “You get sicker people that have lower quality of lives because we have not invested in their health.”
High-sticker-price medical conditions were not always the biggest cost drivers, Jossie said. Instead, four of the top five conditions driving costs in the state health plan during the period were mental health-related: neurodevelopmental disorders (such as ADHD and autism), anxiety, depression and trauma. Cancer and its treatment was the fifth of the top five cost drivers.
“We saw almost a 9 percentage point increase in members getting treated with mental health, at least, and that was followed by hypertension and then diabetes,” Jossie said.
“Investing in health” could help?
The data showed that State Health Plan members living in rural areas used emergency rooms — one of the most expensive sites for care — more frequently, likely because there are fewer primary care and urgent care providers in North Carolina’s rural burgs.
Members in rural eastern North Carolina and rural western North Carolina also went to the hospital more frequently for diabetes. Hospitalization rates were also high for heart disease in eastern North Carolina, known as part of the nation’s “Stroke Belt.”
“We are seeing a trend away from members not utilizing their benefits and being in that healthy risk group, to more and more chronic conditions and increases in members ending up in that catastrophic risk group,” Jossie said.
Some recent changes to state law allowing for an expansion of ambulatory surgical centers in larger counties could help lower costs for the plan. These facilities perform large volumes of similar surgeries — think all knee and hip replacements every day — and often have no affiliation with nearby hospitals. That means they don’t tack on the facility fees that hospitals do, which affects the bottom line.
Other savings can come from telehealth. While rural areas lack many physical services, tele-mental health has helped people with behavioral health issues in those areas, Jossie said. Sixty percent of the telehealth used by State Health Plan members is currently for mental health treatment.
“It’s one of the areas of health care where it just makes a lot of sense to handle virtually,” Jossie said.
Friedman said that the State Health Plan was negotiating volume discounts with “preferred” providers, with a particular focus on finding providers in rural areas. And they’re nudging state employees into programs intended to improve their health outcomes.
Focusing on cost drivers
“We have to make it affordable and simple for members to go to lower-cost, high-quality providers,” Friedman said. That way the plan can reduce the wide variance in the costs of care from one place to another.
One of the biggest investments the plan will be making in the coming year, he said, will be in negotiating contracts with primary care providers, who will be the gatekeepers for people to get to specialists and to imaging centers. And they’re putting mechanisms in place to steer patients to lower-cost options.
For instance, the Treasurer’s office is negotiating with freestanding imaging centers, which generally perform X-rays, CAT scans and other diagnostic procedures for less than what hospitals charge. Friedman said they’re also negotiating with those centers to lower prices in exchange for a higher volume of State Health Plan members, who’ll receive information about where to get these procedures for less and get monetary incentives for using them.
He showed a map indicating low-, medium- and high-priced imaging centers in the Triangle.
“I'm okay with asking someone to drive two more miles to save 50 percent of the cost. I think that is a reasonable trading transaction to do,” Friedman said. “We all know teachers and state employees don’t make a lot of money. This will help save them money, and will help save us even more money.”
Friedman gave the example of a new contract with Lantern, a company that focuses on partnering with certain surgical providers. In other places and for other companies, Friedman said, Lantern is driving down unit cost on surgeries to below 150 percent of what Medicare pays. Currently, the State Health Plan is paying between 250 and 300 percent of what Medicare pays.
“We’re sharing the savings with our members first,” Friedman said.
One rub, though, is that state employees and teachers are being asked to shoulder a bigger part of their monthly health insurance premiums. The increases will be significant this year, which has angered state employees.
Friedman said he’s confident that plan members could end up saving money in the long run if the plan is successful at negotiating these volume discounts and they can eventually pass those savings along to state employees.
“We didn’t get 70 percent of people with a chronic condition of some capacity overnight, and we’re not going to solve that problem overnight,” he said. “We are going to manage it over time. But this is the long game.”
This article first appeared on North Carolina Health News and is republished here under a Creative Commons Attribution-NoDerivatives 4.0 International License.
