North Carolina is the most expensive state for healthcare in the country.

On average, workers pay close to $4,800 a year for “plus one” coverage through an employer-sponsored health plan. Those premiums jump to more than $7,180 a year if you want to insure your kids too.

It is easy to look at those numbers and blame insurance companies for high costs. But health insurers are not singling out North Carolina for high premiums while charging families far less in neighboring states like Virginia, Tennessee, and South Carolina.

Insurance premiums are a direct result of the cost of healthcare in a state. Health insurers are required by law to spend 80 to 85 percent of premiums directly on healthcare. That leaves just 15 to 20 percent to pay for taxes, workforce, business, and administrative expenses all before profit comes into the equation.

Or to put it more simply, if your premium is $1,000 then your health insurer must use at least $800 of it to pay for healthcare. If they don’t use the $800 on healthcare expenses, then you get a rebate, and your premiums should go down. Conversely, if healthcare costs are higher, then premiums must go up to cover them.

In North Carolina, high premiums are a result of healthcare costs growing exponentially for years.

Per person healthcare spending more than doubled from 2000 to 2020, rising from $3,950 to nearly $9,000 a year.

From 1980 to 2020 our state’s healthcare expenses grew faster than anyone in the southeast, and sixth fastest nationally.

Over that same time, total healthcare expenses in North Carolina grew by more than 2,000 percent, rising from $4.1 million to $95.3 million.  

There are many causes of this rapid growth.

• North Carolina has more than 50 health insurance mandate laws on its books. These are laws passed by the North Carolina General Assembly that require businesses and individuals to pay more for their health insurance by telling insurance companies they must pay for extra coverages.

• Certain providers in North Carolina are allowed to charge any amount they want for their services, and North Carolina law requires your insurer to pay it. Providers like anesthesiologists and radiologists work at a hospital, but not under the contract the hospital has with your insurer. When they are not bound by the hospital’s contract, they can bill any amount they want or extort higher reimbursements. This drives up costs by $40 billion a year nationally.  

• Hidden costs like hospital facility fees charged at non-hospital settings drive up costs by billions. This problem has been compounded by the rapid rise of hospital consolidations and acquisitions. Hospitals buy independent practices then begin charging patients a hidden hospital fee to use the practice.  

• Hospitals are opening high-cost locations like free standing ERs in suburbs targeted at privately insured individuals. While these facilities may seem like urgent care centers, the average cost of treating common conditions is 19 times more expensive. The average cost of treating a common condition at urgent care is $167. At a free-standing ER, it is $3,217.  

North Carolina has a healthcare cost crisis. It is growing rapidly.

The Affordable Healthcare Coalition of North Carolina is committed to advocating for policies that will bring healthcare costs down for businesses, workers, and their families.