The North Carolina State Health Pan for Teachers and State Employees provides health care coverage to about 750,00 employees and retirees – and it’s facing tough times ahead.

According to a report from State Auditor Dave Boliek, current actual projections predict a $949 million deficit for the plan by the end of 2027. This number was so jolting that Boliek requested a performance audit to make sure the predictions were actuarily sound and reasonable. It came out last month. 

The answer to both questions was yes. 

How could the state have gotten itself into this situation? According to the performance audit, there were three primary factors:

• “Medical and pharmacy costs increases” 

• “State biennial budget for fiscal years 2023-2025 providing $240 million less funding than was requested.”

• “More than $316 million in COVID-19 expenditures that were not reimbursed by the State.”

Clearly something has to be done, and the state is taking some steps, including the first premium hike in nearly ten years. According to the North Carolina Press, “state employees will face a minimum $20 increase in monthly premiums for their health insurance starting in 2026. Those premiums could reach an additional $110 per month. Deductibles and co-pays will increase as well.”

Additionally, the plan has dropped coverage of some of the most expensive weight loss drugs (advertisements for which seem to inundate commercial time on television). 

Though the state’s legislature has passed two separate bills which included more funding, as of July 1, when the general assembly adjourned, no new budget had been adopted, which means that spending would continue at prior year levels, leaving the health plan in the lurch.  There is the possibility that the legislature may reconvene in coming weeks.

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