North Carolina’s Medicaid system is grappling with funding shortfalls, both from the state budget and from the Congressional megabill. The state Department of Health and Human Services says it will reduce provider reimbursement rates and cut coverage for popular weight-loss drugs on Oct. 1 after state lawmakers failed to approve additional funding.
And beyond that issue, more funding will be needed in the future to handle new Medicaid work requirements that were part of President Donald Trump’s tax and spending bill. That bill also includes potential cuts to the program known as food stamps. N.C. Department of Health and Human Services Secretary Dev Sangvai explained how his agency is handling the challenges on this week's episode of the WUNC Politics Podcast.
This conversation has been lightly edited for brevity and clarity.
Has the dust settled enough around the so-called "Big, Beautiful Bill" for your agency to have some understanding of how this is going to impact the Medicaid program here in North Carolina?
"No, the dust hasn't settled, because while we know what the contours of the legislation are that came from Congress, it's the rules and the implementation guidelines — we have some dates, we have some goals that we know that we're going to need to achieve, but by and large, how we get there is still TBD."
Where do things stand for the 600,000 or so people who got healthcare under Medicaid expansion? Are they at risk of losing coverage?
"There are some new work requirements that are going to need to be implemented. As we start thinking about the work requirements and how we go about implementing them, there's cost associated with putting those work requirements in place: the infrastructure, the monitoring and so forth. Those costs are not being offered through House Resolution 1 right now, so the state needs to come up with the money.
"One of the issues that we have with the way the Medicaid expansion was authorized in this state is that no state dollars would go to fund it. So if we had to fund the work requirements, we can't use state dollars. And if we use state dollars, and we also have the trigger provision — that if state dollars apply for Medicaid expansion, then Medicaid expansion would go away. So it's a multi-step process, but it is one that puts the expansion idea at a little bit of risk if we can't find a way to fund that without using state dollars."
With no additional state Medicaid funding approved by the legislature this month, there may be some reimbursement rate cuts to healthcare providers and some cuts to Medicaid services like weight-loss drugs. What does that look like in practice?
"Honestly, that's been one of the most painful discussions and decisions we've had to go through since I've been in this job. In order for us to close that gap, which we are legally required to do, we can't spend money we don't have.
"In order for us to close that gap, we've looked at a number of things. What services can we stop, or can we reduce? We're one of the few states that funded those GLP-1 drugs for weight loss, for obesity, and if we move forward with these cuts, we're going to have to stop that as of Oct. 1. Similarly, that alone won't get us to that $319 million difference, and so we have notified providers in the Medicaid system that we're going to have to institute rate cuts, anywhere from 3% to 10% if we aren't able to get additional appropriations."
The federal spending bill also makes some changes to the SNAP program, which is sometimes referred to as food stamps. How are those cuts likely to affect the program here in North Carolina?
"The SNAP program helps support about 1.3 million hungry individuals in North Carolina. What House Resolution 1 is doing to the SNAP program is putting more emphasis on the states to carry the cost of the administrative burden. The vast majority of the cost of the SNAP program is actually the food benefit, but it's also putting pressure on states to cover more of the food cost, as it relates to the state's performance and ensuring the right people get the benefit at the right time. "
Do you have any sense for what the cost estimates might be to the state?
"The cost share could be up to $420 million a year, depending on how we perform in North Carolina."
Sangvai also provided an update on COVID-19 vaccine availability. Listen to the full conversation on the WUNC Politics Podcast.
