State health department officials again told lawmakers Tuesday that North Carolina's Medicaid program is poised to run out of money before the end of the fiscal year, imperiling coverage for more than two million people.
"There will come a point where we may have a couple hundred million dollars, but we don't have enough to pay all of our health plans or we don't have enough to pay all of our vendors. And that's what I mean by not having enough to pay our bills," Melanie Bush, DHHS' interim assistant secretary for Medicaid, told the Joint Legislative Oversight Committee on Medicaid.
Without additional funding, Bush said, DHHS expects that North Carolina's Medicaid program will run out of money some time in April. The state's fiscal year runs from July 1 to June 30.
Gov. Josh Stein reiterated Monday that his administration believes North Carolina's Medicaid program needs an additional $319 million. Stein included the ask in a $1.4 billion "critical needs" budget request.
Legislators did not pass a comprehensive state budget in 2025, instead allowing the previous biennium's budget to remain largely intact. The General Assembly is scheduled to return on April 21 for its short session, and Medicaid funding is expected to feature prominently.
As of the end of January, North Carolina's Medicaid program had spent about $3.9 billion of the $6.4 billion the General Assembly has appropriated to it.
DHHS officials started asking for additional Medicaid funds last year, requesting $819 million. The department received $600 million, using $100 million to address a shortfall in the Medicaid Managed Care Oversight Fund.
The remaining $319 million gap has lingered since.
Stein called for lawmakers to hold a session in November with the purpose of funding Medicaid, but Republican legislative leaders brushed if off, arguing there was no crisis because the state's Medicaid program had enough money to keep operating into the spring.
The rebase would help fund health insurance for about 2.38 million North Carolinians who are covered by the state's traditional Medicaid program. Those impacted include people who are at least 65 years old, children until they turn 21 years old and people with intellectual or developmental disabilities whose households meet income requirements.
The rebase funding does not impact the 713,755 North Carolinians who receive coverage through Medicaid expansion. That coverage is funded by the federal government and a tax on the state's hospitals.
North Carolina will likely need to pay more for Medicaid in future years because people who are on Medicaid are using it more frequently and the federal government is providing the state with less aid as it grows wealthier, Bush told lawmakers.
That trend will likely hold, Bush said, even as the state projects that the number of people enrolled in North Carolina's Medicaid program will decline. In 2026, for example, the federal government is projected to give North Carolina $17.9 billion to help fund Medicaid, down from $19.2 billion in 2025.
Lawmakers expressed frustration Tuesday at the size of the rebase request.
"These rebases, we've got to get a hold of that. We can't keep doing that. And with the projected one for the '26-'27 (budget) being significant, we've got to make some adjustments somehow," said Sen. Jim Burgin, R-Harnett.
Burgin also asked what is driving increases in the state's Medicaid spending.
North Carolina's Medicaid spending is largely driven by older adults and people with disabilities who are enrolled in the program, Bush said. Those people make up 21% of those enrolled in Medicaid and account for 54% of its spending.
"People who are older and people who have disabilities are generally more medically complex and require long-term services and supports that are quite intensive and resource heavy," Bush said.
Bush pointed specifically to research-based behavior health therapy for people who have been diagnosed with autism, so-called 1915(i) services to people with disabilities who are waiting for an innovation waiver slot stay at home and prescription drug costs as the largest drivers in Medicaid spending.
Bush used what she called "a Jello chart" to describe the original $819 million rebase request. That included:
- $368 million to account for medical inflation, Medicaid enrollment and changes in how people use services;
- $200 million to pay for programs whose funds were non-recurring in the state budget;
- $124 million to make up for reduced federal match funding;
- $47 million to make up for federal changes in tailored care management;
- $40 million because the schedule means that DHHS has to write an extra check to vendors this year;
- and $40 million because it launched a specialty plan for children and families in December.
Sen. Ralph Hise, R-Mitchell, raised concerns about several elements of the rebase request, including putting the extra check into the rebase and including the non-recurring funds. By putting the funds into the rebase, Hise said, they would be rolled over into the starting point for the following year's budget.
"Generally when things are funded non-recurring, it's a policy decision whether you want to continue the program beyond the time the program has been funded and not an actual rebase discussion about those type of continuation fundings of the program," Hise said.
In previous years, Bush said, federal funding meant that DHHS was able to pay non-recurring but vital items like vendor contracts for an enrollment broker using the federal funds. With that federal reduction, though, the department finds itself scrambling to include they are funded as part of the rebase request.
"We have to include every single thing and the kitchen sink into our rebase to make sure that we are able to pay our bills," Bush said.
