WakeMed-Atrium deal could lead to cost hikes for state workers, officials say. WakeMed pushes back

State government employees and retirees could see health insurance premiums increase by more than $100 per year if WakeMed goes through with a merger with Atrium Health, North Carolina State Health Plan leaders said Friday.

Thomas Friedman, the State Health Plan’s executive administrator, said Friday that Atrium is currently charging the plan anywhere from 15% to 40% more than WakeMed for the same services. If WakeMed combines with Atrium and then raises its rates to similar levels, he said, the state plan could have to raise premiums for every person on the State Health Plan to cover the increased cost of care, assuming the additional hundreds of millions of dollars can’t be covered by the state. 

“If we moved our current book of business — same people, using the same thing — and paying that much more money, we would need to either get from taxpayers or members an amount of money that would have cost somewhere between $7 and $11 a month,” he said.

That would mean an extra $84 to $132 per year for policyholders.

WakeMed is one of the smallest hospital networks in the state. Charlotte-based Atrium is one of the biggest in the nation. The proposed merger would put Atrium in charge of WakeMed. 

An Atrium spokesperson didn’t immediately respond to a request for comment. WakeMed says it is “committed to providing value to the patients we serve,” adding that the deal would “help hold down costs in a variety of ways.” WakeMed pointed the finger at insurance providers for increased healthcare costs, calling out the State Health Plan for increasing premiums to cover a deficit of more than $1 billion — something the hospital system called “an enormous financial problem.”

“Consumers experience health care costs primarily through insurance, not health care delivery,” Kristin Kelly, a WakeMed spokeswoman said in a statement Friday. “WakeMed reimbursement has generally not kept pace with rising healthcare costs of delivering care, while premiums continue increasing.” 

‘A good partner’

The State Health Plan provides health insurance to about 750,000 state employees, retirees and their family members. The possible increases Friedman described would come on top of other premium hikes that have been approved or proposed as plan officials seek to close the deficit. The plan hiked premiums starting in January, for the first time in years, and is expected to do so again for 2027 rates, during a meeting scheduled for next month.

Friedman made the comments Friday at a meeting of the State Health Plan board, which was voting to increase copays and out-of-pocket costs for nearly 180,000 people on the Medicare Advantage version of the state plan.

Several members of the board expressed disbelief that people in far-flung areas of the state could be forced to pay more money because of WakeMed, which mostly serves people in just two counties, Wake and Johnston.

State Treasurer Brad Briner, who serves as the chairman of the State Health Plan’s board, has criticized the deal, saying the only outcome he foresees is higher WakeMed charging higher costs. “That's the whole point, is to raise prices,” Briner said of WakeMed’s interest in combining with Atrium, in an interview Friday.

And because so many state employees live or work in Wake County, that could have a sizeable impact on the State Health Plan, and on state taxpayers more broadly. He criticized WakeMed for not working more closely with him and other State Health Plan officials. 

Kelly, the WakeMed spokesperson, said the hospital wants to remain a good partner. “Just like every large employer, Treasurer Briner is focused on keeping health care costs low,” she said. “We look forward to working with him to do that. We have always taken care of state employees, and we look forward to taking care of them in the future.”

Briner wants the Federal Trade Commission to examine the proposal. Attorney General Jeff Jackson also plans to review the proposal, his office said last month.

“The economic evidence behind mergers is that they increase prices,” Briner said Friday. “They increase prices for the services, and they increase prices for health insurance premiums.”

WakeMed says the transaction would result in increased scale and operational operating efficiency, which, along with increased competition, could help constrain the cost of care. 

“Uniting with Atrium Health will not raise costs; scale will help with reducing our costs for supplies, medicines and equipment,” Kelly said. “The goal is to preserve consumer choice by helping maintain a three-system market in Wake County, rather than allowing a stand-alone provider to weaken over time.” 

Commissioners to grill WakeMed

Under the proposed deal, Atrium Health would take control of the nonprofit entity that operates WakeMed — a deal that could bring at least $2 billion in new investment to Wake County. The deal would enable Atrium to enter the fast-growing Triangle market and compete with other networks such as UNC Health and Duke Health. 

The Wake County Board of Commissioners, which appoints directors to WakeMed’s board, is scheduled to meet Monday to discuss the deal. Commissioners invited WakeMed’s leadership team to brief the board on the proposed transaction and to answer commissioners’ questions about the deal. 

WakeMed’s board unanimously approved the transaction in April. Ahead of Monday’s meeting, commissioners sent WakeMed a list of more than 100 questions about the deal. They’re expected to grill executives on governance of the combined company, and what role the county would play in it. They also plan to ask about competing merger proposals, as well as how the transaction would affect competition, access to care, local jobs, community investment, commitments to underserved communities, among other topics. 

County commissioners were poised to vote on a measure early last month that would have paved the way for the transaction to proceed, but the vote was postponed after Briner and other state officials raised questions about the deal.

If the deal were to go through as proposed, Atrium would become the sole corporate member of the nonprofit that owns WakeMed “to ensure unified governance, consistent oversight, and alignment with system objectives,” according to a summary of the deal provided to county commissioners. WakeMed would continue as the same legal entity without dissolving or reincorporating. Wake County commissioners would still have the power to appoint eight of the WakeMed board’s 14 members. Atrium would be allowed to appoint the remaining six members.

As part of the deal, Atrium has pledged to make a $2 billion capital commitment to further WakeMed’s strategic initiatives. By partnering with Atrium, WakeMed could gain easier access to clinical trials and capital, which could accelerate its expansion plans throughout the county. 

The companies say the combination would improve the quality of healthcare, attract and develop medical talent and accelerate research and innovation, laying the foundation for more clinical specialty care. 

Atrium promises the deal will create thousands of jobs, but state and local political leaders have been skeptical of that claim. WakeMed is already one of the largest employers in the state, and mergers frequently result in layoffs — something county commissioners plan to ask executives about on Monday. Briner has said that growth in the region is enough to fuel WakeMed’s expansion without Atrium as a partner. 

In the meantime, as the deal continues to be scrutinized, WakeMed is moving ahead with expansion plans in the county. 

In October, WakeMed received approval to build a health complex in northeastern Wake County. The 32,000-square-foot Rolesville development is expected to be WakeMed’s sixth healthplex and tenth full-service emergency department. WakeMed paid $6.2 million for 31 acres at the intersection of Burlington Mills Road and Walls Cove Lane in Rolesville, according to a deed filed last week in Wake County. The facility is expected to open next year. 

In November, WakeMed broke ground on a 150-bed mental health hospital connected to a 45-bed acute care hospital in Garner. Construction is expected to wrap up in 2028.