RALEIGH — In his monthly call with reporters, State Treasurer Dale Folwell discussed the possible impact of the recession on the state’s pension and health plan.
“I don’t know of any statistics that the White House could be looking at that would lead them to a different conclusion than we are in a recession,” said Folwell when asked about the Biden administration’s denial that the country is in a recession.
According to a release by Folwell’s office, the Bureau of Economic Analysis reported that the GDP contracted .9% in the second quarter of 2022, following a steeper dip of 1.6% in the first quarter of the year.
Folwell said unemployment numbers were complicating the matter and noted that the way unemployment numbers are generated does not include those actually seeking employment.
Folwell’s release also noted other negative trends, including a 9.1% increase in inflation in June 2022 compared to June 2021 and three consecutive months during which consumer confidence declined, mostly due to the rising cost of gas, food and other commodities.
“Citizens know that things have turned down,” said Folwell. “The citizens know that it is costing them more than ever to drive, eat, and generally live.”
Folwell said the average family right now is spending over $6,000 more than they spent last year.
“As far as the pension plan is concerned, we have preliminary numbers that show that for the fiscal year – that’s the 12-month period ending June 30 – that our pension plan is down about 7%,” Folwell said.
Folwell said in the first quarter the state’s pension plan was down 3.5% but that benchmarks showed it should have been down more than that. He later added that the Standard and Poor’s number was down 20% for that time period.
“We don’t like being down 7%, but we like it better than being down 20,” said Folwell.
In terms of the impact of the recession on the State Health Plan, Folwell said that “healthcare now owns North Carolina and Wall Street owns healthcare.”
“We are very concerned about increasing costs associated with healthcare,” Folwell said. He added that the strain on citizens finances due to inflation puts additional “stress on their wallet” anytime a healthcare co-pay is increased.
“We have preliminarily approved the premiums for next year and for the fifth straight year we did not increase family premiums; we have frozen them,” said Folwell about the state health plan. “I am disappointed in that because I wanted to lower family premiums.”
Health care inflation has been lagging, coming in at 3.2% year over year, according to Folwell’s release. Inflation in that area is expected to speed up next year because medical service contracts are typically tied to the calendar year and “the recent record-breaking inflation has not yet worked its way through the health care system.”
Folwell said he is “deeply concerned” that in the coming year healthcare contracts will be “renegotiated upward.” He also expressed serious concern that the state health plan was going to need “over $5 billion more incremental dollars” over the next several years in order to stay solvent.
“We’ve done all we can,” said Folwell, adding that the Medicare Advantage product is a zero premium and will stay that way for almost five years and that his office has saved nearly a billion on its pharmaceutical contract.
Folwell also took aim at the “healthcare cartel in North Carolina” which he said has been “unwilling to negotiate at a profit margin of almost a hundred percent profit over Medicare reimbursement rates.”
