By Jaymie Baxley
More than 670,000 North Carolinians have enrolled in Medicaid since the state expanded access to the government-funded health insurance program in December 2023.
Medicaid expansion, which passed with bipartisan support after years of resistance from most Republicans in the N.C. General Assembly, raised the state’s strict income threshold for Medicaid. That opened up the program to many working adults with lower incomes who previously made too much money to qualify.
The measure has been hailed as a landmark policy change that is reshaping North Carolina’s health care landscape and closing long-standing coverage gaps, particularly in rural and underserved communities.
Now, state health officials are warning that President Donald Trump’s so-called One Big Beautiful Bill, a version of which is expected to go before the U.S. Senate for a vote as early as this weekend, would effectively kill North Carolina’s expansion — stripping coverage from hundreds of thousands of residents who only recently became eligible for it.
That could include people like Daikwon Redfearn.
The 23-year-old graduated from N.C. Central University in 2024 with a degree in criminal justice and plans to attend law school. He has a job, but it doesn’t provide health benefits or pay enough for him to afford insurance on his own.
“If my coverage disappeared, that would actually hurt me a lot,” he said. “I want to be an adult who doesn’t have to rely on government assistance, but as of right now, in my life, it is a little hard because the costs of things are shooting through the roof.”
Tripping the ‘trigger’
Jay Ludlam, deputy secretary for NC Medicaid, explained that two key provisions of the version of the One Big Beautiful Bill that already passed the U.S. House — a work requirement for enrollees and a freeze on provider taxes — would jeopardize the North Carolina expansion program by creating an unfunded mandate for the state.
Under the Affordable Care Act, the federal government pays 90 percent of the cost for beneficiaries of Medicaid expansion. Hospitals cover the remaining 10 percent of the state’s expansion costs through a special tax assessment.
The General Assembly’s passage of expansion was contingent on that payment arrangement staying in place. State lawmakers designed the Access to Healthcare Options Act with a “trigger” that discontinues Medicaid expansion if the state is forced to pick up any costs.
The work requirement approved by the U.S. House and now up for consideration in the U.S. Senate would require states to verify that able-bodied Medicaid beneficiaries like Redfearn are working, volunteering or attending school for at least 80 hours a month. Ludlam said North Carolina would need to invest in new systems and hire additional workers to implement the requirement.
But the state’s ability to generate revenue to pay for those systems and staff would be limited by the U.S. House’s proposed freeze on provider taxes that’s included in their version of the One Big Beautiful Bill. North Carolina uses the taxes — presently set at 6 percent of providers’ net revenue from patients — to draw down federal matching funds for Medicaid. The federal government reimburses North Carolina for about two-thirds of every Medicaid dollar the state spends on the program.
The work verification effort would likely cost millions, if not tens of millions, of dollars to get started and to operate. If the state ends up spending money to check the work status of expansion beneficiaries, that could violate the condition placed on expansion by the General Assembly.
“There is a potential interpretation where the use of funds for expansion eligibility could trigger the elimination of expansion here in North Carolina,” Ludlam said.
New reading raises alarm
It was initially assumed that expansion would be spared the chopping block because Congress did not move to reduce the 90-percent rate paid by the federal government.
But Ludlam said closer inspection of the bill passed by the U.S. House on May 22 revealed that the proposed work requirement and tax freeze also posed a threat. He attributed the delayed realization to the “dynamic pace” of legislation coming out of Washington.
“Sometimes you read the law and you understand how it works,” Ludlam said. “But then you read it from a different angle and you realize that this would, potentially, trigger that issue.”
The bill being put together by the U.S. Senate is expected to go a step further than the House version by imposing a 3.5 percent limit on provider taxes.
In addition to potentially triggering the end of expansion, Ludlam said the Senate proposal could force North Carolina to discontinue the Healthcare Access and Stabilization Program, or HASP, if the lower tax cap is pursued. Launched in 2023 as part of expansion, HASP boosts reimbursement rates for hospitals that treat Medicaid patients, helping to bring payments more in line with what they say are the actual costs for providing that care.
“The work that’s being done on the provider taxes is of concern because of the potential impact it will have on North Carolina,” said Ludlam, adding that 98 percent of taxes collected by the state go toward the “provision of services” for Medicaid beneficiaries. “They reimburse providers for services provided. This is the health care that North Carolinians need, and the provider taxes help cover those costs that the state would otherwise bear.”
U.S. Sen. Thom Tillis has raised concerns about the bill’s impact on the state’s Medicaid program, with The Hill reporting that he recently circulated a chart among colleagues showing a nearly $39 billion funding loss for North Carolina. His communications director did not immediately respond to a request for comment from NC Health News.
The U.S. Senate parliamentarian, meanwhile, on Thursday determined that the proposed cap ran afoul of the chamber’s procedural rules. Tillis told The Associated Press that the parliamentarian’s decision “confirms that we weren’t ready for a vote yet.”
If Congress moves forward the One Big Beautiful Bill, the only way to protect expansion might be for the N.C. General Assembly to repeal the trigger law.
But state lawmakers, having reached an impasse over the state budget, have recessed and left Raleigh. The Senate passed a resolution adjourning until at least the end of July.
And even if both the North Carolina Senate and House of Representatives were to return in early August, they’ve been so far apart on a number of big ticket issues — state employee raises, the cost of a new children’s hospital, even the state’s Medicaid budget — that expecting them to create a fix around Medicaid expansion before the fall could be a heavy lift.
There is also the question of whether state lawmakers would even support the trigger law’s removal. Rep. Donny Lambeth (R-Winston Salem) has said the General Assembly would not have passed expansion in the first place without it.
Ludlam said it is not clear when beneficiaries might lose their coverage if expansion is terminated. The federal proposals would give states until December 2026 to begin implementing the work requirement.
“The effective date of the work requirement could be interpreted as the date where we start spending those state dollars to build systems or training county workers to basically begin the work,” Ludlam said. “But it could happen much earlier.”
Real consequences for residents
On top of everyday expenses like rent, gas and groceries, Redfearn is making payments on his student loans. Medicaid, he said, allows him to receive regular checkups from his doctor without worrying if the visits will break the bank.
“It’s such a relief that I don’t have to sit there and budget my money to find out if I can go to the doctor and still make it this month,” he said. “If my Medicaid coverage was to just disappear, that would be super detrimental to me financially and health-wise.”
His concerns were echoed by Beverly Edwards, a pediatrician in Hertford County. She and other physicians shared their concerns about the future of Medicaid during a virtual news conference held Wednesday by the Committee to Protect Health Care, a national advocacy organization.
“When we talk about Medicaid, we’re not talking about this big, amorphous, abstract government program,” said Edwards, who has been practicing in the small town of Ahoskie in the northeastern part of the state for more than 30 years. (Edwards is also on the NC Health News board of directors.) “We’re talking about our patients and their lives.”
About 21 percent of the more than 8,800 Medicaid recipients in Hertford gained coverage through expansion, which has had an outsized impact on North Carolina’s rural counties. Rural residents account for nearly 36 percent of the state’s expansion beneficiaries.
Expansion also threw a lifeline to rural hospitals that were struggling to stay afloat because of uncompensated care costs incurred from uninsured patients. Twelve rural hospitals in North Carolina either shut down or stopped providing inpatient care from 2005 to 2023, according to data from the Cecil G. Sheps Center for Health Services Research at UNC Chapel Hill.
“I just shudder to think about what’s going to happen, and we’ve lost some smaller hospitals in our system already, so things are at a crunch,” Edwards said. “It’s an overwhelming issue, and I just hope that the government, the Congress, will see this as not just unnamed faces, but their neighbors, their friends, their family. It’s going to affect somebody that they know.”
KEEP UP WITH THE LATEST
Republish our articles for free, online or in print, under a Creative Commons license.
Medicaid expansion is house of cards designed to collapse after the designers are out of office. Nothing new there. To be fair, the OBBB should make expansion funding identical to standard Medicaid funding, and let the states decide if they want to remain expanded. That would remove power from Washington and force ACA reform that should have been debated in the first place avoiding the current issue. Nothing new here either.