North Carolina House Approves Health and Medicaid Budget with Service Cuts and Subsidy Increases
The North Carolina House of Representatives approved a budget plan on May 22 for the next two fiscal years that impacts healthcare funding, Medicaid, child care regulation, and tax policies. The House and Senate have differing budget proposals on key issues including child care subsidies, Medicaid pilot program funding, a new children’s hospital project, and income tax rates. Both chambers aim to increase rates for child care subsidies to assist low-income families, but they differ significantly on funding for the UNC-Duke children’s hospital, with the House cutting $100 million versus the Senate proposing an additional $638 million.
The House budget proposes to eliminate Medicaid coverage of GLP-1 drugs like Ozempic for weight loss, and both chambers are set to cut funding for the Healthy Opportunities Program, a Medicaid pilot providing social support services to combat health inequities. Despite evidence of cost savings from this program, state legislators express varied confidence in its financial benefits.
Medicaid funding remains a central concern amid federal budget uncertainties. The House's plan allocates $500 million for Medicaid rebase adjustments, less than Governor Stein's requested $700 million, and proposes to eliminate the Medicaid Contingency Reserve, reallocating approximately $970 million to emergency disaster relief. This move has raised concerns about maintaining a financial safety net amid uncertain federal funding.
State employee salary adjustments include an average 2.5% raise, with starting salaries for new public school teachers increasing significantly. The budget also requires eliminating some vacant positions in the health department to redirect savings toward improving current employees' recruitment and retention.
Mental health service management organizations (LME-MCOs) face reductions of $20 million annually in the House plan, affecting services for uninsured and underinsured populations. Advocates warn cuts could impair support for vulnerable groups and delay assistance for those waiting on Medicaid programs.
Child care regulation changes aim to increase subsidy reimbursement rates and provide providers with more operational flexibility, including larger group sizes and changes in staff oversight requirements. These adjustments respond to rising costs and labor pressures in the child care sector.
The budget includes a provision to seek Medicaid expansion for personal care services in adult care homes, allowing more residents to qualify for Medicaid support and potentially increasing assisted living capacity.
Additional funding is proposed for regional long-term care ombudsmen to reinforce resident advocacy in care facilities, though the number added falls short of advocacy goals. The House plan maintains state funding for the Senior Health Insurance Information Program, critical for Medicare counseling, while the Senate had proposed cuts.
The legislative process will continue with negotiations between the House and Senate to finalize the budget by June 30, though delays are common. The upcoming decisions will shape Medicaid funding structures, health care service availability, and social support programs critical to North Carolina’s healthcare landscape.