Across the United States, health care costs continue to rise (YouTube) faster than wages and inflation. North Carolina is ground zero for the health care cost crisis, claiming the unwanted label of one of the most expensive states for care. In 2025, Blue Cross NC paid $11.9 billion in claims – an increase of roughly $1.5 billion year over year. Last year was not an anomaly; market volatility has become the norm.

Despite spending so much, North Carolinians aren’t getting healthier or spending less. Chronic conditions like heart disease and obesity are growing, and our state’s population is getting older – requiring, and deserving, better health care.

These unsustainable costs are paired with a system that is failing to deliver.

While it may feel unpredictable, it is not random. The health care system is designed to reward complexity, obscure true prices, and allow costs to rise without clear accountability. Several key factors are driving these rising costs across North Carolina. 

Hospitals are allowed to charge higher prices than doctor’s offices, even when the service is the same, and often without proof of better outcomes or better care. There are no policies in place protecting consumers from these extra fees.

For example:

The same medication administered in a physician’s office can cost about $15,000 compared to $25,000 in a hospital outpatient setting. The cost of a knee replacement can vary by as much as $21,000 within the same region, depending on where the procedure is performed, while delivering the same outcome.

Patients may also be charged facility fees when care is provided in hospital-owned settings. These are separate charges added to cover the cost of operating the facility, even for routine outpatient services. 

High-cost and specialty medications continue to be one of the largest contributors to rising health care costs. In 2025, medical drug spending was Blue Cross NC’s largest cost driver, accounting for roughly one-third of total cost increases.

Drug manufacturers set prices. There is often limited or blocked competition, especially for newer or specialty drugs, which allows prices to start and remain high. In many cases, insurers have little ability to negotiate these prices.

Research shows hospital mergers can raise prices by up to 65 percent, even when the hospitals involved are nonprofit. A Harvard analysis found that, inside consolidated systems, physician services cost up to 26 percent more and hospital services cost 31 percent more, on average, than they would otherwise. 

Consolidation can also affect access. Patients seen in system-affiliated practices wait about 15 days longer for appointments on average, making it harder to get timely care. 

In many cases, higher prices are not accompanied by better health results.

AI can be a helpful tool to drive efficiency, reduce administrative burden, and support care delivery. However, it cannot replace a provider’s judgment. 

There are AI tools that help providers code for insurance payment, document their care, scan medical records, and often label patients with additional, more severe diagnoses. While the patient’s health data may factually showcase that possibility, the care received after the additional coding does not always add up.

This means costs are increasing even when patients receive the same care, regardless of additional diagnosis codes. In fact, one analysis found inpatient costs increased 9% in a single year (PDF), with about 20% of that growth tied to aggressive documentation rather than changes in care.

A health care mandate is a government requirement that insurers cover certain services or benefits, often adding cost to the overall system. Higher than the national norm, North Carolina has more than 50 mandated benefits for insurers, which can drive up the cost of coverage. 

While often well-intended, mandates do not always improve affordability or access and can also limit individual choice. These requirements can unintentionally lead to more complexity in an already fragmented system.

As the only North Carolina-based not-for-profit health insurer, and the only insurer choosing to serve in all 100 counties, we are taking meaningful steps to do our part. As a health insurer focused on people, not shareholders, we have the flexibility, and the responsibility, to take on the root causes of rising costs and push for meaningful change across the health care system.

We spend 86 cents of every premium dollar on medical expenses. We recognize the importance of doing our part, including reducing our operating expenses and reinvesting in tools, technology, and programs that deliver greater value for our members.

Prescription drugs remain one of the fastest-growing drivers of health care spending. We are redesigning pharmacy programs to streamline the supply chain, expand lower-cost options, and help members access the most effective medications without unnecessary financial strain. 

We are working with providers across North Carolina to shift away from a system that rewards volume and toward one that rewards quality and efficiency, helping reduce the total cost of care over time.

Through our value-based care arrangement, we've already delivered more than $1 billion in savings, demonstrating that aligning incentives can meaningfully reduce costs while improving care for patients.

We’re using our scale and data to challenge practices that increase costs without improving care, like unnecessary price differences tied to where care is delivered.

When care is easier to access and better coordinated, it’s more effective and less expensive. That’s why we’re investing in care navigation, primary care access⁠, and support programs that help members get the right care in the right setting.

For example, our hospital-based care navigators have helped more than 12,000 members receive more appropriate care while saving over $32 million.

We’re committed to ensuring that efforts to lower costs do not come at the expense of access, particularly in rural and underserved communities where maintaining essential services is critical.

Many costly health conditions are driven by factors outside the health care system. That’s why we’re investing⁠ in areas like youth mental health, the connection between food and health, and expanding access to care in rural communities to address health challenges earlier and reduce the need for more complex and costly care over time.

Unfair pricing, drug costs, hospital consolidation, AI coding, and health mandates are embedded in how the health care system operates today and make costs harder to see, harder to control, and increasingly difficult for families and businesses to manage. 

Making health care more affordable will require addressing these underlying structural challenges across the entire system and recognizing that no one entity can do it alone.