North Carolina Overhauls State Health Plan to Avert Billion-Dollar Deficit

Facing a projected billion-dollar deficit, North Carolina is overhauling its State Health Plan for 750,000 employees, introducing the first major premium hikes in years and pivoting to a new tech-driven "population health" strategy, as reported by NC Newslin. The move scraps a prior controversial pricing plan that failed to control costs.

• A grim diagnosis: The plan was on a collision course with insolvency, driven by a user base with skyrocketing health issues. During a Dec. 5 board meeting, actuaries revealed that 70% of members now have at least one chronic condition, and the pool of healthy members has shrunk by nearly a quarter since 2019. The plan's biggest expenses aren't always what you'd expect, with four of the top five cost drivers now being mental health conditions like anxiety and depression.

• The new playbook: The new strategy centers on playing hardball with providers and steering patients to lower-cost options. To accelerate the move, the state is partnering with the surgical network Lantern to create a pre-approved list of providers for certain procedures, which members can use at no out-of-pocket cost.

But the fix isn't free. To shore up its finances, the plan is now making members shoulder higher premiums pegged to their salaries for the first time. The move has stabilized the plan’s immediate finances but has drawn anger from state employee groups. The State Health Plan isn't the only financial challenge on the new treasurer's plate; he is also addressing a $16 billion deficit in the state's pension fund.