A high-stakes contract negotiation between Duke Health and insurer Aetna could lead to another round of health insurance premium increases for more than 750,000 North Carolina state employees, retirees, and their families. The dispute has prompted the state's top financial officer to intervene, warning that a resolution favoring the healthcare provider would directly impact the wallets of public sector workers.
Key Takeaways
- A contract dispute between Duke Health and Aetna threatens to increase costs for the North Carolina State Health Plan.
- Over 750,000 state employees, retirees, and their dependents could face higher insurance premiums.
- This potential increase is in addition to a separate premium hike already approved by the plan's board in August.
- North Carolina State Treasurer Brad Briner is publicly opposing Duke Health's demands to prevent further financial strain on state workers.
Contract Standoff Threatens State Health Plan
The core of the issue lies in negotiations over reimbursement rates. Duke Health, a major healthcare provider in the Triangle region, is seeking higher payments from Aetna. Aetna, which administers the North Carolina State Health Plan, is resisting these demands to control costs.
While typically a private business matter, this dispute has significant public implications. The State Health Plan is Aetna's largest customer in North Carolina, covering a substantial portion of the state's public workforce. Any increase in costs that Aetna agrees to with Duke Health would likely be passed on to the state plan, and subsequently, to its members.
This situation places thousands of state employees in a precarious position. If an agreement is not reached, Duke Health could leave Aetna's network, forcing patients to either find new doctors or pay much higher out-of-network costs for their care.
Why the State is Involved
The North Carolina State Health Plan provides health insurance coverage for over 750,000 individuals, including teachers, state troopers, and other public servants. Aetna acts as the third-party administrator for this plan, managing the network of doctors and hospitals and processing claims. Because of this relationship, any contract Aetna signs with a major provider like Duke Health directly affects the plan's budget and member costs.
State Treasurer Intervenes to Protect Employees
North Carolina State Treasurer Brad Briner has taken an active role in the public discourse surrounding the negotiations. He expressed concern that acceding to Duke's request would force another premium increase on state employees, who are already facing higher costs.
"We can't just give Duke whatever it wants," Briner stated in an interview. He explained that the health plan's board already voted in August to raise premiums to cover an existing budget shortfall.
"We’ll be raising premiums on everybody already. And if we give Duke what it wants, then we're going to have to raise them even more. And that's just not fair."
Briner noted that the plan was facing a $500 million shortfall when he took office in January 2023. In response, his office has worked to renegotiate with hospitals across the state to lower costs. He argued that rewarding Duke's demands would be unfair to other providers who have cooperated with the state's cost-saving efforts.
Fact: Duke University, including its extensive health system, is the second-largest private employer in North Carolina, surpassed only by Walmart.
Competing Arguments from Duke and Aetna
Both corporations have presented their cases publicly, using different strategies to gain support. Duke Health has launched a public campaign that includes radio advertisements and a dedicated website to explain its position.
Duke Health's Position
Duke Health officials maintain that their request is necessary to cover the escalating costs of providing medical care. They argue that Aetna's current proposals are insufficient.
"Unfortunately, Aetna has not agreed to updated reimbursement rates that keep pace with rising health care costs and reflect the actual cost of providing patient care," Duke Health said in a statement. The provider claims that Aetna's proposed rates would hinder its ability to invest in essential services.
- Technology upgrades
- Staffing and recruitment
- Essential patient services
Duke's statement warned that this lack of investment "puts our community’s continued access to high-quality care at risk."
Aetna's Response
Aetna, owned by CVS Health, framed its position as a defense of its members against rising healthcare expenses. A company spokeswoman emphasized the need to keep care affordable.
"North Carolina has among the highest health care costs in the country and Aetna is unwavering in our effort to protect our North Carolina members from additional escalations in costs," said spokeswoman Shelly Bendit. She confirmed that discussions are ongoing with the goal of reaching a "mutually agreeable outcome."
Financial Pressure on State Workers
The timing of this dispute adds to the financial strain on North Carolina's public employees. The premium increases approved in August were structured on a sliding scale, with higher earners paying more, but the move was unpopular across all income levels.
Compounding the issue is the fact that the North Carolina General Assembly has not passed a new state budget, meaning state employees have not received any pay raises. The combination of stagnant wages, rising inflation for everyday goods, and increasing healthcare costs effectively amounts to a pay cut for many.
Duke's Financials Questioned
Treasurer Briner expressed skepticism about Duke's financial justification for the rate hikes. "Duke is ostensibly a nonprofit hospital," he said, pointing out that the health system regularly reports hundreds of millions of dollars in profits and holds billions in investments. "There's a difference between successful and greedy. And I think we're crossing that line here," Briner added.
As the deadline for a new contract approaches, the financial well-being of hundreds of thousands of state workers hangs in the balance. While Briner hopes for a compromise, he remains firm that the state cannot afford to absorb the costs of Duke Health's current demands without passing them on to employees who are already feeling the pressure.
