NC Treasurer Folwell crusades against high hospital costs, but his case lacks a key part

When he was running for state treasurer, Dale Folwell came to a meeting at The News & Observer carrying a bowling pin. It was a prop to explain how you need to aim well to take down multiple problems at once.

Now that he is state treasurer, Folwell has traded the bowling pin for a lance, figuratively speaking. He’s presenting himself as a modern day Don Quixote with a CPA, an idealist taking on giant hospital systems to drive down health care costs for North Carolinians.

Folwell, whose office oversees the 750,000-member State Health Plan, started his crusade by trying to get hospital systems to set transparent pricing for procedures paid for by the state. He was rebuffed. Now he’s looking broadly into the finances of the state’s largest hospital systems and growing more alarmed by what he finds.

“It’s like an onion,” he said. “The more you peel it, the more you cry.”

The treasurer invited health care financing experts to evaluate the state’s major hospital systems. Their report showed that the largest systems have billions of dollars in reserve funds, even as they enjoy tax-exempt status. Meanwhile, the eight largest hospital systems provide charity care equal to only about 60 percent of the amount they save in taxes, the report concluded.

“We have these corporations disguising themselves as nonprofits,” said Folwell, who refers to the hospital systems as “a cartel.”

For a response, I called Cody Hand, senior vice president of the North Carolina Healthcare Association, and told him I’d just spoken with Folwell. His chagrin over the treasurer’s attacks on big hospital systems was clear. He asked wearily, “How many times did he call us a cartel?”

Hand said the hospital reserve funds are required by borrowing and licensing agreements, and some of the funds have grown when invested. He said focusing on charity care expenses alone misses the wider community benefits that a nonprofit hospital provides.

Folwell is undaunted by those explanations. He sees giant hospital systems setting up monopolies and fleecing the people who are giving them a tax break. But apart from himself, he said, “There’s nobody sounding the alarm at any level.”

That comment sounds like a swipe at state Attorney General Josh Stein, whose office evaluates hospital mergers and provides consumer protections against price gouging in any area. It resonates louder because Stein is the likely Democratic nominee for governor in 2024 and there is speculation that Folwell, who unsuccessfully sought the GOP nomination for lieutenant governor in 2012, may enter the governor’s race on the Republican side.

Stein said he has done a great deal to hold down health care costs by suing drug companies that inflate their prices. But he said he needs the legislature to give him more authority to block or dictate the terms when big hospital systems absorb independent hospitals or smaller systems.

The attorney general also points to the weak spot in Folwell casting himself as a crusader for more affordable health care: The treasurer has not come out in favor of Medicaid expansion. That change would reduce charity care, promote hospital competition and boost rural hospitals so they don’t have to join larger systems out of financial distress.

Stein said of Folwell, “His adding his voice to Medicaid expansion could really be helpful to lowering the partisan heat behind this issue. If he’s for expansion, that’s great. I just haven’t seen him talk about it.”

Folwell, actually, would rather not talk about it. “It’s none of my business whether I’m in favor of expanding Medicaid,” he said.

Tapping frustration with hospital costs is a powerful issue. It’s drawing attention to the fairly low-profile treasurer’s office and Folwell could ride it, lance in hand, all the way to the governor’s mansion. But if he’s going to advocate for making health care more accessible by making hospital stays more affordable, he has to advocate for Medicaid expansion.

Otherwise, he’s just tilting at windmills.

This story was originally published February 13, 2022 at 4:30 AM with the headline "NC Treasurer Folwell crusades against high hospital costs, but his case lacks a key part."