North Carolina's Treasurer Dale Folwell is warning that the state health plan could soon be facing insolvency.
The plan that provides health coverage to 742,000 state employees, retirees and their dependents is facing a $106.3 million income loss for the 2023-2024 fiscal year, WRAL reported Aug. 6.
The health plan has spent reserves that are used to cover annual costs, and the minimum it needs to maintain is expected to fall below the required threshold by 2026, according to the report. A net loss of $439 million in 2026 and a net loss of $824 million in 2027 is projected without intervention from the state legislature, according to Mr. Folwell.
“We're one pandemic away from not being able to pay our bills,” he told reporters. “We need them to fully fund the state health plan based on the cost. Period."
Increases in drug and healthcare costs, along with Covid-19-related expenses were cited as reasons for the financial losses.
The state health plan stopped covering GLP-1 drugs such as Wegovy and Saxenda this year because of the high costs. Starting in 2025, Aetna will begin administering the plan after BCBS North Carolina lost out in the procurement process — BCBS had held the contract for more than 40 years.
Unfunded healthcare benefits promised to retired public employees and their dependents is common across states, incentivizing state lawmakers to look in new directions to save on costs. Unfunded retiree healthcare liabilities across all states surpassed $1 trillion in 2019, according to the American Legislative Exchange Council.