Folwell: State health plan insolvent by 2026

That’s the dire warning from our current state treasurer:

The health plan that covers hundreds of thousands of state employees, retirees and their family members faces a drastic shortfall — and possible insolvency — in the coming years. Now the plan’s staff is trying to figure out how to close the gap. The solution could include raising premiums for some members.

The State Health Plan is facing a $106.3 million loss in income for the 2023-24 fiscal year, according to State Treasurer Dale Folwell, the chairman of the health plan’s board. And the plan has spent reserves to cover annual costs. The minimum amount the plan needs to pay for services is projected to fall below the plan’s required threshold by 2026, according to Folwell.

“We’re one pandemic away from not being able to pay our bills,” Folwell said Tuesday during a regular monthly video call with reporters.

The board that oversees the North Carolina State Health Plan requires the insurance plan to maintain savings reserves of a year-end cash balance that exceeds the estimated cost of services already provided to its members.

But anticipated increases in drug and healthcare services costs threaten to eat through its reserves if the plan doesn’t cut costs or find ways to boost revenue, according to a health plan presentation released late last month.

The plan’s staff forecasts a net loss of $439 million in calendar year 2026 and another net loss of $824 million in Calendar year 2027. Without action, the presentation said, the plan is “likely to be unable to pay bills in fall 2026.”

Covid-19-related expenses have cost the plan $528 million — almost 60% of which hasn’t been reimbursed by the General Assembly, according Folwell. He says the most recent state budget funded the plan by $240 million less than needed.

In addition to claiming that state lawmakers shortchanged the State Health Plan on Covid-era reimbursements, Folwell has also spent years calling on the legislature to inject other funding into the health plan. Those pleas have largely fallen on deaf ears at the Republican-controlled General Assembly — even though Folwell, a longtime Republican politician, served as the No. 2 state House leader before becoming treasurer after the 2016 elections.

Facing fiscal pressures, the health plan has worked to cut administrative costs. But Folwell said legislative help is needed on top of that. Despite sitting on a $1 billion surplus, the Republican-controlled state legislature hasn’t been willing to spend more on the health plan.