Asheville – North Carolina Treasurer, Dale R Folwell, CPA, is known for his open door policy. August 6th was the 91st consecutive month Treasurer Folwell has offered media representatives the opportunity to interview him in his “Ask Me Anything” Q&A. The topic this month was on North Carolina’s State Health Plan (SHP) teetering on the brink of financial collapse.
The State Health Plan is currently experiencing a $106.3 million loss in income for the 2023-24 fiscal year, and the Board of Trustees overseeing the Plan will be presented with detailed options for addressing the budget shortfall at upcoming board meetings.
Dipping Into the Stabilization Fund
Upon taking office, Treasurer Folwell inherited one of the worst funded state health plans in the nation, but has made significant strides in decreasing the unfunded level. Despite those efforts, the Plan faces imminent insolvency as it has expended reserves to cover annual costs. Projections show the Target Stabilization Fund, which is the minimum amount the Plan needs to pay for services, will fall below the required threshold by 2026 and likely will be unable to pay bills. Unanticipated changes to Medicare Advantage could add and additional tens of million of dollars in costs.
The Rising Tide of Healthcare Costs
At the heart of the crisis is the unsustainable surge in prescription drug costs, compounded by the withholding of funding from the General Assembly. North Carolina received an allocation of $500 million to cover COVID-related expenses, only half has been released. “Prescription and health costs are going up at least twice as high as the amount of funding the General Assembly has chosen to give us,” stated Treasurer Folwell, “They have also not chosen to reimburse us for actual COVID related expenses. The plan can only pay its bills based on the premiums we receive and the appropriations that we receive from the General Assembly. We’re one pandemic away from not being able to pay our bills?”
Value-based Care
Treasurer Folwell has tried to get the General Assembly to enact reference based pricing (RBP), an alternative to traditional healthcare pricing where reimbursement for medical services is based on a specific reference point rather than on a provider’s billed charge. Folwell estimated that RBP could have saved the plan an estimated $300 million. He said, “If the General Assembly had passed reference base pricing we would not be talking about this today.”
Even if the General Assembly did pass RBP, transitioning from traditional fee-for-service models to value-based care has challenges, including resistance from healthcare providers and insurers. The head of the hospital association told Folwell, “You’re not our customer. We really don’t even have to talk to you,” shedding light on the obstacles faced in operationalizing cost-sharing agreements.
Drug Costs Are Not Equal
The Treasurer spoke about GLP-1 drugs creating a lot of costs for the plan. GLP-1 drugs help lower blood sugar levels and promote weight loss. They’ve approved for the State Health Plan and Medicaid. He stated, “Americans get charged up to 15 times more for GLP drugs than peers in Canada, Japan, or Europe. It’s estimate that the cost is less than $75 a month, but the retail price in North Carolina can range up to twelve hundred dollars a month for this one drug.” Since Medicaid and the SHP are both government plans, feels he could get better pricing for the State Health Plan, with noticeable savings, if he knew what Medicaid is paying. Although he has asked DHHS repeatedly how much they pay, he still has not received an answer.
Efforts to Stem the Tide
According to Folwell his office has done everything humanly possible to cut all types of expenses out of State Health Plan, adding, “We have cut hundreds of millions of dollars of expenses out of running the State Health Plan, and we can document all that now. We have made investments in higher reimbursement rates for primary care, mental health, and physical therapy, but the general Assembly will have to put more money in the plan.”
The Road Ahead
Even as Treasurer Folwell is coming to the end of his final term in office, he is deeply concerned about the rising cost of healthcare, the high cost of family plan premiums for state employees that have caused families to lose coverage, and hospitals who are not keeping their agreement to offer Charity Care to patients in exchange for financial perks the state gives them. He has said his door is open to whomever becomes the next treasurer if they need help.