By Clayton Henkel
North Carolina teachers and state employees can expect more changes to the State Health Plan in 2027 as trustees work to control rising costs for care.
Tom Friedman, the State Health Plan administrator, says the plan closed a $507 million deficit in 2025, but there’s more work to be done to keep the plan financially sound for the 750,000 state employees, teachers, retirees and dependents that it serves.
“We fundamentally have two short-term options,” said Friedman. “We can make everyone’s benefit worse and charge people much more money for everything. The other option is to get physicians, doctors, hospitals to lower their prices.”
Friedman said the only way providers will be willing to work with the Plan to lower their costs is if the state can direct a significant increase in patients their way as preferred providers.
Friedman presented a three-tiered proposal to trustees of the health plan Tuesday that would focus on reducing the total cost of care by funneling more plan participants to the preferred providers. Higher patient volume can help the plan negotiate significant discounts, as much as 50% in some cases, Friedman told the board.
The “Access Provider” tier is intended to maintain access in rural areas and outside of North Carolina with limited provider options. A third “Non-preferred Provider” tier would designate providers who have not agreed to lower costs. Plan participants would have to pay more to see providers in this tier.
“There are some providers that will continue to charge more. That is not a sustainable approach,” said Friedman. “We cannot let providers charge whatever they want for things and get the same access to patients.”
Steering patients, saving money
Getting plan participants to change who they see for care might be a tall order. But Friedman said 70% of the care delivered to State Health Plan participants is occurring in 10 counties. He’s banking on customers being willing to travel for high-quality care at a lower out-of-pocket cost.
“We need to get better prices and use our scale to get those better prices,” said Friedman.
Last July, the State Health Plan announced a partnership to steer patients to Lantern’s specialty care doctors. Plan members were promised no-cost surgery — no deductibles and no copays — for using a Lantern provider. More than 400 surgeries and procedures have been completed through the Lantern platform as of early March. Plan officials think a similar approach could work for non-surgical care.
While some medical practices may opt not to participate, Friedman said the goal is to get 90% of state health plan members using preferred or access providers.
In addition to steering patients to preferred providers, Friedman said plan officials are examining moving to a structure that ties future premium growth to wage growth. For example, an employee earning $55,000 annually would see their premium increase by 1% if they received a 1% raise. For a worker paying $50 a month for standard coverage, they could expect their premium to increase to $50.50 a month.
Suzanne Beasley with the State Employee Association of North Carolina did not weigh in on linking premiums to wages. Instead, she urged trustees to make provider contracts public information, hoping greater transparency would help negotiate lower costs.
Charles Owens, a health care technician and union leader from Cherry Hospital in Goldsboro, told the trustees if they want to truly fix the State Health Plan, they would end the relationship with Aetna as the state’s third-party administrator. Owens said premiums and co-pays have doubled since Aetna took over in 2025.
Owens said that he has co-workers at the psychiatric hospital who can’t afford preventative care and end up in critical care when they can no longer work.
“I’m the guy on the floor, not the one crunching numbers,” said Owens. “I’m going to repeat what I asked last year. Please, please, please, I beg you, take care of those of us who take care of this state.”
On Tuesday, trustees voted to approve the three-tier provider network. The copays associated with those tiers will be voted on at the board’s June 5, 2026 meeting.
Update: A representative for Aetna reached out after publication to clarify the company doesn’t set premiums, copays, or benefits. Aetna says that is up to the State Health Plan’s Board of Trustees.
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