Big Money: Ballooning Health Costs in NC
Health care costs in NC grew at sixth-highest rate in the United States over the past 40 years.
Cost estimates for health insurance, new for 2024, may come as a bitter pill to North Carolina employees and businesses. This year, North Carolina health insurance premiums exceed the national average by over 9%.
The cost of single coverage for a popular mid-range health plan in North Carolina now averages $638 a month. But in neighboring states, similar health plans are a comparative bargain. In Virginia, for instance, such premiums average 36% less per month; in Georgia and South Carolina, premiums are 20% and 15% less, respectively.
So, what’s behind the regional markup?
Location, location, location
A state's regulatory climate has substantial impacts on health costs, and therefore health insurance premiums. Consumer research is clear: “The cost of health care has been rising for years, but where you live heavily influences how much you pay,” notes a national analysis of state premiums in Axios.
Insurers aren’t targeting North Carolinians for premium pain. Instead, they’re responding to the financial reality that premiums are pegged directly to a state’s health care costs.
“The issue isn’t the insurance companies,” affirms health care advocate Peter Daniel, in a recent editorial. “They’re not somehow deciding to charge more for health insurance in North Carolina than they do just across the border in Virginia or South Carolina. The issue is North Carolina’s government mandates on health care.”
Think of it as a domino effect, but with epic proportions: Mandates requiring insurers to fund some aspect of health care (dubbed a “hidden tax”) escalate the overall cost of care. That cost, in turn, fuels higher insurance premiums. Higher premiums then increase the financial burden for North Carolinians.
We’ll drill down soon into financial impacts for state families and businesses. But below, we chronicle what’s driving those impacts: the exponential increase in health care costs, decades in the making. Consider long-term trend data:
Total health care expenditures in North Carolina nearly tripled between 2000 and 2020. In 2000, state health care expenditures totaled $32 billion; by 2020, spending had ballooned to $95 billion.
Health care expenditures per capita in North Carolina increased 126% between 2000 and 2020, from $3,950 to $8,917.
North Carolina has ramped up health care spending faster than most other states, over a long arc of time. Between 1980 and 2020, health care expenditures in North Carolina grew by 8.1% annually, on average—the 6th highest rate of growth of any state in the nation, and the highest in the Southeast.
Average Annual Percent Growth in Health Care Expenditures
by State of Provider, 1980-2020
Map: Kaiser Family Foundation.
More recent trends show continued and surging health care costs. Total spending on personal health care costs in North Carolina rose nearly 52% between 2010-20, and 24% between 2015-20.
Is it any wonder North Carolina is routinely called out for disproportionately high health care costs?
Clearly, intervention is needed, and soon.
