Gov. Stein urges NC Medicaid funding, says lawmakers put politics before health

As the clock winds down, Democratic Gov. Josh Stein called on North Carolina lawmakers to provide additional Medicaid funding to avoid cuts set to take effect Wednesday.

Stein said both chambers of the legislature, which are led by Republicans, and his administration agree more funding is needed for Medicaid. But similar to criticisms raised by lawmakers about him and his health agency, he said the GOP-led General Assembly was politicizing the issue.

He said legislative proposals this week “were an encouraging development. I had hope over the weekend that I would have good news and I could issue unfettered praise to the legislature here today, but this week, they did not get it done. They put their political disputes ahead of our people’s health.”

“The General Assembly has failed you, but it is not too late for them to step up and do the right thing,” he said on Thursday at a press conference at the Alliance Medical Ministry, a clinic serving uninsured people in Raleigh.

There are over 3 million people on Medicaid in North Carolina.

At stake are Medicaid cuts set to begin Wednesday — including a 3% across-the-board reduction in provider payment rates, steeper cuts for some, and an end to coverage of drugs like Wegovy when used for weight loss. The reductions are separate from those tied to the federal spending bill known as the “One Big Beautiful Bill.”

Stein and his health agency say more funding is needed to prevent those reductions, while Republican lawmakers agree to add money but disagree among themselves on what else should be tied to the bill. The House wants a narrower bill, while the Senate has linked the funding to a new children’s hospital system in Apex and a rural health initiative.

Stein said he would “keep pushing to reverse the damage that will be done and I’m using every tool at my disposal to ask for the money,” including calling on lawmakers to pull from funds in the state’s Medicaid contingency fund, a reserve to cover shortfalls within the Medicaid program.

Lawmakers also say cuts are politically motivated

Republican legislators are at odds with Stein about the urgent need for the money. They have described the provider rate cuts as politically motivated and raised doubts about the need to implement them now, with House Speaker Destin Hall saying Tuesday that he believed the state likely had enough money to last until about June of next year.

Stein rejected that, saying “the State Constitution requires the state to have a balanced budget. DHHS cannot spend money that it does not have. It cannot put health care costs on a credit card. It cannot spend at a rate that we know is unsustainable due to increased utilization and due to rising health care costs,” he said.

He added that the legislature has not fully funded Medicaid in six or seven years and that every year there is a shortfall, but this year there are no federal funds to make up the difference. “We cannot look to Washington to save us. We must save ourselves,” he said, referencing federal cuts made at the federal level to Medicaid.

Jay Ludlam, the deputy secretary for NC Medicaid, said that last fiscal year the Medicaid program ended with $9,000 in its account after spending about $34 billion. He said “that is too close of a call for this big of a program.”

At the same time, Stein said the state could put off cuts until late October, when lawmakers are set to come back, but it would cause issues.

In late July, lawmakers approved $600 million for Medicaid, with $500 million going toward keeping provider rates steady and services running. That was less than Stein’s March budget request for $700 million for the fiscal year ending June 30, 2026. By mid-May, the state budget office had warned more money was needed, and in mid-July the Department of Health and Human Services — a cabinet agency under Stein — echoed that warning, according to DHHS.

“We put off the cuts for a full quarter of this fiscal year,” Stein said. “We did not institute these cuts in July, in August or September, because we knew they were coming back in September, we were as clear as a ringing bell that this was their moment to solve this problem.” By putting cuts off, “you’re having to find these savings of $319 million over a nine-month period of time instead of a 12 month period of time, which means the cuts have to be greater.”

“We could put the cuts off till October, although by putting them off to October (when lawmakers are back)” then “they’re going to say, put it off for another month,” he said.

Rep. Grant Campbell, a Concord Republican and OB-GYN, pushed back on statements made by Stein. He said on X after Stein’s presser that “vague mention of adjustments were made in May” and that Campbell and Rep. Timothy Reeder, an Ayden Republican and physician, received information from DHHS on Aug. 10 at a medical board retreat “as a ‘head’s up’” before providers were told.

North Carolina health groups representing hospitals, doctors, nurses, long-term care facilities, home health agencies and other providers called on DHHS in a letter in early September to pause the cuts so lawmakers can come to an agreement. But DHHS said the “step is unavoidable. If funds are not appropriated, delaying these cuts past Oct. 1 would have devastating impacts.”

Stein said the cuts were “reversible” and called on lawmakers to come “back to the table.”

“I know the House and the Senate can work together. I know the General Assembly and my administration can work together,” he said. “I am ready to sign a clean Medicaid funding bill today.”

Effects of cuts

Cuts could mean fewer doctors accepting Medicaid patients, layoffs or even closures.

Chelsea Gray from Rutherfordton said Thursday in the press conference that she is a mother of three. She said her daughter Molly lives with a “medicine-resistant, surgery-resistant, non-curable epilepsy that causes her to have around 191 seizures a day.”

She gets help for Molly’s care through Medicaid. Some of Molly’s specialists already have appointment times of 4 to 11 months and cuts “will force some of her doctors and other professionals to stop accepting Medicaid altogether.”

“The result will be delays in life-saving care for people like my Molly across the state, as well as incredible, unnecessary trauma for families and caregivers statewide,” she said.

Medicaid serves more than 1.4 million children in North Carolina.

Details on the House and Senate disagreement

Lawmakers have said they don’t agree with DHHS’ estimate, pointing instead to lower estimates from the legislature’s nonpartisan Fiscal Research Division. But both chambers, led and controlled by Republicans, have indicated they are willing to provide more money, and Stein has said he’d support a bill providing additional funding — even if not the full amount requested — with a commitment to reevaluate. But the Senate and House differ on a key area.

This week, both chambers filed competing bills. The House passed what it called a “clean bill” that provided Medicaid funding to avoid the cuts. The Senate-passed bill included Medicaid funding plus about $200 million for two other projects: a children’s hospital system in Apex built by Duke Health and UNC Health, and the N.C. CARE initiative, which aims to improve rural health, including by establishing three rural care centers.

In 2023, lawmakers approved nearly $320 million over three years for the hospital and $420 million for N.C. CARE, with the $200 million in this bill representing the remaining funds. The Senate argues the money should be released through the Medicaid bill because it was already approved in the 2023 budget. Hall has countered that he wasn’t speaker at the time and questioned whether the hospital funding should proceed, pointing to Duke and UNC’s large endowments.

The House has also said that the conversation on the children’s hospital is part of the budget dispute, which also involves future tax cuts. Lawmakers failed to pass a budget by the beginning of the new fiscal year on July 1.

Stein on Thursday said that he thinks “we should focus on what we agree on,” which is that Medicaid needs more funding.

“What’s funny is, I think the Senate’s right on the children’s hospital, I think the House is right on the tax trigger. So I could resolve this thing immediately on the budget, but those are fights that need to be had another day,” he said.

Neither chamber took up the other’s version of the health bills before leaving town.

Barring a change, that leaves cuts scheduled to take effect Wednesday.