North Carolina State Health Plan Raises Premiums Amid Rising Chronic Conditions

North Carolina Treasurer Brad Briner has implemented significant changes to the State Health Plan's funding, including raising health insurance premiums for approximately 750,000 state employees, retirees, and their families. This increase addresses a projected deficit, which had been forecasted to reach up to a billion dollars by 2027 if trends continued unchecked. Briner's approach contrasts with his predecessor's plan to keep premiums flat, instead opting for premium increases and program cuts to stabilize finances. Actuarial analysis from Segal Consulting presented data indicating a decline in the overall health of plan participants since 2019, with a substantial rise in chronic conditions like diabetes, hypertension, asthma, and coronary artery disease. The proportion of plan members without chronic conditions decreased by almost 23%, with rural members experiencing worse health outcomes and higher hospital utilization rates, particularly for diabetes and heart disease. Mental health conditions have become major cost drivers for the State Health Plan, with neurodevelopmental disorders, anxiety, depression, and trauma accounting for significant treatment increases. Cancer remains a significant cost driver alongside mental health conditions. The State Health Plan is pursuing strategies centered on population health management to improve health outcomes among members. This includes shifting focus to chronic disease management and negotiating volume discounts with preferred providers, particularly in rural areas. These initiatives aim to steer members towards lower-cost, high-quality providers, including the expansion of ambulatory surgical centers and telehealth services for behavioral health. Telehealth has notably increased access to mental health treatment, making up 60% of telehealth utilization among plan members. The State Health Plan is also working on contracts with primary care and freestanding imaging centers to provide cost-effective care and reduce wide cost variances in provider charges. Despite rising premiums, officials believe negotiated provider discounts and member incentives to use lower-cost care options could result in long-term savings. However, these changes are part of a longer-term strategy to address the increasing prevalence and costs associated with chronic diseases and catastrophic health events. The focus on population health represents an ongoing effort to manage the health of state employees collectively by promoting healthier behaviors and effectively monitoring chronic conditions. This approach is seen as necessary for the financial sustainability of the health plan and improved member outcomes. These developments highlight the challenges faced by large public health insurance plans in balancing cost, coverage, and quality while addressing changing demographic and health trends in the insured population. The North Carolina State Health Plan's experience may provide insights for similar public sector health plans managing rising chronic condition burdens and seeking cost containment.