Medicaid Expansion and Other Key Health Provisions Included in the Governor’s Budget

News | June 1, 2022



Written by Kirsten Siebenga

Last week, Governor Roy Cooper released his proposed state budget that included major health provisions. The $29.3 billion budget is a clear indication of the governor’s priorities as the state supports North Carolinians in its recovery from the vast and continuing impacts of COVID-19.


Governor Cooper expressed in his statement the impact that COVID-19 has had on North Carolinians and the state’s focus on improving social determinants that impact health:


Families experienced tremendous stress through the COVID-19 pandemic but have emerged to find that they still struggle accessing affordable health care, housing, and childcare. This budget recommendation addresses those needs by expanding health care access to more than 600,000 working North Carolinians, making housing more affordable through down payment assistance and construction of additional rental housing, and investing in the early childhood educator workforce.”


Key provisions outlined in the Governor’s budget include Medicaid expansion, addressing the workforce shortage, increasing affordable housing, and investing in early education.


Medicaid Expansion

Under the Affordable Care Act, the Federal government covers 90% of Medicaid costs for expansion populations in states that have chosen to expand Medicaid. If North Carolina were to expand Medicaid, the remaining 10% of costs of expansion would be covered through assessments on hospitals and premium taxes paid by health insurance companies in North Carolina. Under the American Rescue Plan Act, in addition to continuing the ACA provision that guarantees federal coverage of 90% of the cost of expanding Medicaid, states that have not already expanded will receive additional incentives to expand; ARPA would increase the percent of Medicaid expenses that the federal government will pay for traditional Medicaid populations by five percentage points for two years.


The governor’s budget highlights the projected impact of Medicaid expansion on uncompensated care throughout the state, including covering previously uninsured North Carolinians who depend on state-funded mental health and substance use programs. The budget also projects that Medicaid expansion could contribute to the financial stability of rural hospitals.


Conversations surrounding Medicaid expansion in North Carolina have continued, as earlier this month the North Carolina General Assembly convened a non-standing Joint Legislative Oversight Committee to hear from experts in health care access and Medicaid expansion. Several NCIOM Task Forces, including the Task Force on Serious Illness Care, the Task Force on a Perinatal System of Care, and Healthy North Carolina 2030, have recommended improved access to care by addressing the health insurance gap in the state. Senator Joyce Krawiec, a member of the committee, recently sat for an interview with the North Carolina Medical Journal about this process.


Addressing Health Care Workforce Shortages

The Cecil G. Sheps Center reports that by 2033 the state will face a shortage of 12,500 registered nurses. As a recent NCIOM blog post also explains, the health care workforce shortage is not only about recruiting a new workforce, but also retaining the existing workforce. The governor’s budget proposes a recurring annual investment of $15 million and a nonrecurring investment of $30 million for a total of $45 million for community colleges and universities to support the development of a strong health care workforce.


Increasing Access to Affordable Housing

The budget proposes around $189 million, with $24.2 million recurring each year, to expand affordable rental options and create more channels for home ownership. The NC Housing Finance Agency, reports that there is a shortage of affordable homes in all 100 counties in North Carolina and the state needs over 500,000 homes for low-income families. The investment more specifically includes provisions to support the down payment of first-time home buyers, providing assistance to low-income individuals to cover housing utilities, investing in drinking water and wastewater infrastructure, and supporting special populations with housing to minimize disruptions in their care. These investments help to work toward the Healthy North Carolina 2030 goals. The Healthy North Carolina 2030 Task Force, convened in 2019-2020 by the NCIOM, identified key targets for improving severe housing problems as measured by four key indicators: overcrowding, high housing costs, and lack of kitchen or plumbing facilities. The task force outlined a state goal of reducing the percentage of North Carolinians experiencing severe housing problems from 16.1% to 14% by 2030.


Early Education

The governor’s budget includes $525 million for supporting North Carolina’s educators, schools and students. As part of these funds, the budget describes plans to recruit, train, and retain educators across the state. The budget also outlines $89.4 million for early childhood learning, which specifically allocates funds to expanding Pre-K across the state for children from birth to age five. This investment in education further supports the Healthy North Carolina 2030 goal of raising third-grade reading proficiency from 56.8% to 80% by the year 2030.