State Health Plan needs $250 million from the legislature, plan for financial stability

The health insurance plan covering teachers and state employees needs the legislature to reimburse it for COVID costs and to develop a strategy to address rising healthcare costs over the long term, state Treasurer Dale Folwell told reporters Tuesday. 

The legislature has only reimbursed the plan about half of its COVID-related expenses, Folwell said, and needs another $250 million to cover those costs. It’s money that the state received from the federal government to cover COVID expenses.

That $250 million would not address the health plan’s long-term financial woes, however. 

The plan’s operating reserves will drop below required minimums next year, Folwell said. 

“The unfunded liability continues to go up,” he said. “This is not a crisis that is going away.”

The offices of House Speaker Tim Moore and Senate leader Phil Berger did not respond to emailed questions Tuesday.

Folwell’s office manages the health insurance plan, which covers about 750,000 state employees, teachers, dependents, and retirees.

Health and prescription drug costs are rising faster than state appropriations, Folwell said. State appropriations are the health plan’s main source of revenue. “What it will mean is the General Assembly will have to put more money into the plan as they’ve had to do in times of the past.”

Folwell is in the final year of his second term as treasurer. He has been stymied in his attempts to control health costs and reduce family premiums. 

“It’s a source of frustration and a source of embarrassment,” Folwell said of his inability to lower family premiums. “We have not been successful at doing that for lots of different reasons.”

In January, the state health plan’s board of trustees made the controversial decision, at Folwell’s urging, to stop covering drugs such as Wegovy when they’re used for weight loss due to the high cost. 

He failed to convince hospitals to go along with a pricing proposal that would have saved the health plan money, but would have cut payments to hospital systems. A 2019 bill that called for studying the type of payment system Folwell wanted passed the state House but stalled in the Senate. 

He’s been at war with hospitals over their surpluses, lack of transparent pricing, executive compensation, and charity care. He refers to the state’s major hospital systems as “the cartel.”

“Everybody in this state knows there’s something wrong with healthcare,” he said.