Treasurer Folwell calls on the General Assembly to help State Health Plan shortfalls

State Treasurer Dale Folwell first reported a potential shortfall to the State Health Plan at a Council of State meeting this week. He shared wigth NC SPIN a letter he has written to legislative leadership giving more details and a proposed solution to help address the problem.  

In a letter to legislative leadership, the Treasurer said, "For the past seven years, I, with the support of the Board , have relentlessly tried to place the Plan on a more sustainable path by using the Plan's largenes to negotiate better contracts. In addition, we have pushed health care providerss towards more transparency, so we know exactly what we're paying for; we have reduced the other postemployment benefits (OPEB) liability; and with the General Assembly's partnership, we have tripled the value of the Retiree Health Benefit Trust Fund (RHBTF), thus increasing the funding ratio from 2.4 percent to 10.7 percent. This may be one of the largest increases in the United States.

"The Board will be asked to vote this week to increase premiums for a substantial number of retired members who have already served the state and live on a fixed income. Approximately 4,200 Medicare-eligible retirees who do not qualify for premium-free coverage would see an increase from $4 to $37 per month, coming out of a monthly average pension benefit of $1,800. Medicare-eligible retirees who cover their dependents would also have to pay this increased amount for their dependant's premiums. Finally, covering this increase for the 160,000 Medicare-eligible retirees who are eligible for premium-free coverage under the current law will cost the state an additional $66 million.

"On top of these Medicaid Advantage costs, the Plan requires additional funding of $89 million to operate within our statutory reserve requirements through the end of calendar year 2025. To achieve this, the Board will be asked to vote on significantly increasing contributions from the Retiree Trust Fund (RHBTF). This need to withdraw additional funds from the RHBTF undermines years' worth of our hard work. As you know, we partnered with the General Assembly to take steps to address the state's $50 billion long term pension and health care unfunded liabilities. This action allowed the Plan to move $870 million over the last four years into the RHBTF, strengthening the state's financial position and credit worthiness. 

"My current request is that you authorize the reimbursement of funds which were expended for COVID-related expenses by the Plan as it served its mission of protecting the health of our members. This reimbursement would be used to honor our partnership in reducing the state's unfunded liabilities, by repaying the RHBTF for covering the current funding gap and continue our efforts towards adequately funding health benefits. These funds could come from the $5.4 billion the General Assembly received from the federal government for this purpose of which, as we understand it less than $2 billion has been dispersed.

"........Investing in the Plan's future isn't political, it's mathematical. The Board and I have a fiduciary responsibiity to never put anyone ahead of our members. As a primary funder, you have the same responsibility."

 The legislature needs to act soon to fund these problems.