Medicaid work requirement coming to NC; more than 48,000 could be affected in Triad region

North Carolina is committed to implementing a controversial work requirement mandate for Medicaid expansion that could lead to a projected 255,000 enrollees, or nearly 38%, losing their coverage starting in January 2027.

Gov. Josh Stein signed into law on July 7 bipartisan House Bill 546 that mandates the N.C. Department of Health and Human Services impose a work requirement as a condition of participation if authorized by the Trump administration's Centers for Medicare and Medicaid Services.

The cuts could affect an estimated 9,713 of 25,696 Forsyth County Medicaid expansion recipients and 15,806 of 41,817 in Guilford County, as of July 2 according to the NCDHHS dashboard.

HB546 also provides Medicaid coverage for women who have just given birth for 12 months, making telehealth services more accessible, and launches a new statewide Medicaid health plan for children and young adults served by the child welfare system.

Stein did not specifically mention the Medicaid work requirement mandate in signing the bill.

The CMS authorization has become increasingly likely with the Republican-sponsored reconciliation "One Big Beautiful Bill" that was signed into law July 4 by President Donald Trump.

The Kaiser Family Foundation reported in a November analysis of Medicaid expansion that lowering the CMS funding match below 90% of administrative costs would serve as a means for congressional Republicans to significantly weaken the Affordable Care Act rather than undertake an unpopular outright repeal effort.

The 255,000 figure comes from a July 1 NCDHHS presentation to the legislature that listed states "can request up to a two-year delay through Dec. 31, 2028, if making a good faith effort" to meet the mandate.

For the 14-county Triad and northwest N.C. region, there are 127,039 Medicaid expansion enrollees, so a 37.8% reduction rate could affect 48,020. Potentially affected statewide are 669,527 recipients.

Affected are expansion enrollees between ages 19 and 64. There are exceptions for parents, guardians and caretakers with kids ages 14 or under, as well as caregivers for the medically frail and disabled, and pregnant women.

Eligible enrollees under the expanded program are those who earn too much to qualify for Medicaid coverage, but not enough to purchase coverage on the private insurance marketplace.

Expansion provides medical coverage to people making under about $20,120 a year. Likewise, a family of three earning under about $34,000 would be eligible, as well as a family of six earning under $55,586.

Health care services include: primary care; inpatient and outpatient hospital care; maternity and postpartum; vision and hearing; prescription drug benefits; behavioral health; preventive and wellness; and medical equipment, devices and therapies.

Who is at risk?

The key provision of the work requirement is participating at least 80 hours a month of either — or a combination of — paid work, job training, community service or school by "able-bodied" adults.

Opponents of Medicaid work requirements claim the criteria is geared toward getting beneficiaries to drop from the rolls, rather than getting them employed.

The Commonwealth Fund said in a January analysis that work requirements "place significant reporting burdens on Medicaid enrollees ... if they are unable to consistently document and submit proof of the number of hours they've worked."

Those considered as vulnerable include service workers without consistent hours, and those who experience seasonal layoffs.

"Reporting hours can be especially difficult for people with multiple jobs, people without internet or computer access, and people with limited English proficiency," according to The Commonwealth Fund analysis.

The Robert Wood Johnson Foundation projects 263,000 North Carolinians could lose their Medicaid expansion coverage because of the planned certification and recertification process.

"Most people would lose coverage because of confusion about the policy and lack of awareness about how to remain covered — not because people with Medicaid choose not to work," according to the foundation.

Meanwhile, the left-leaning N.C. Justice Center estimates as few as 8% of Medicaid expansion recipients would be affected by the mandate.

"Workers at high risk of being denied Medicaid include those who experience job loss, have temporary jobs or unstable work schedules, or have health conditions or caregiving responsibilities that affect their ability to work consistently," said Michael Karpman, principal research associate at the Urban Institute.

Stein cited his concerns about how 3.11 million N.C. Medicaid beneficiaries would be negatively affected by significant cuts made to federal funding in the reconciliation bill.

"Much is still needed from our state legislature when it comes to protecting Medicaid, including a full rebase to preserve current services and a serious effort to defend against devastating federal cuts," Stein said.

"State legislators will need to take a hard look at our Medicaid laws, our state budget and our long-term revenue requirements.

"I am encouraged that Senator Berger stated that he will lead efforts to work through any implementation issues, and I look forward to working with him."

Medicaid expansion link

Most of the work requirement mandate language in HB546 comes from House Bill 76, the landmark bipartisan Medicaid expansion signed into law by then-Gov. Roy Cooper in March 2023 that debuted on Dec. 1, 2023.

The mandate was a key component of gaining enough Republican support, including crucially from Senate leader Phil Berger, R-Rockingham, to get HB76 through the legislature.

When HB76 was signed into law, there were few concerns that an N.C. work requirement mandate would become a reality.

The Affordable Care Act, also known as Obamacare, that spawned Medicaid expansion had survived numerous termination attempts in Congress.

There also had been several federal court rulings determining state work requirement mandate laws as unconstitutional.

However, the U.S. Senate's version of the reconciliation bill made work requirement mandate and the potential ending of Medicaid expansion altogether critical financial offsets of more than $1 trillion so that tax cuts for the ultra-wealthy could be made permanent.

Currently, N.C. Medicaid expansion recipients are checked annually for eligibility.

The reconciliation bill would require the state Medicaid program and county Department of Social Services offices to check for renewal eligibility every six months starting in January 2027.

NCDHHS said in its legislative presentation that the twice-a-year eligibility check "will lead to more work and delays at local DSS offices, and more people losing coverage" from either being unaware of the new eligibility requirement or lacking the necessary paperwork tracking their 80-hour per month participation.

Dev Sangvai, the state's health secretary, said the new reconciliation law "marks a significant moment with real consequences for North Carolina."

"While the full impact will become clearer in the coming weeks, we already know that it will result in billions of dollars being taken out of our state's economy and will undermine the health of North Carolinians.

"There will be a significant reduction in federal funding for services that are core to the well-being of individuals and families across North Carolina," Sangvai said. "These cuts not only impact the people that rely on them directly, but also strain the systems and communities that hold us all together."

Rep. Pricey Harrison, D-Guilford, said she supported HB546 for the same reasons as Stein.

"What is very troubling is how at the same time, the recent federal cuts will eliminate coverage for more than 660,000 North Carolinians, close rural hospitals, limit access to health care for others, and more," Harrison said.

Rep. Donny Lambeth, R-Forsyth, and the primary sponsor of the state's Medicaid expansion legislation, said the telehealth section of the bill "will help respond to patients who will find this a much more efficient way to get medical care."

Lambeth said that "many emails I have received suggest those who will lose benefits do not deserve the benefits because they don't qualify."

"We continue to evaluate the net impact and should know more when and if we get into a conference process to get a budget done.

"I am not convinced it is as impactful as Pricey suggests."

Healthcare systems' roles

A pivotal financial element of North Carolina's Medicaid expansion program involves its version of the Healthcare Access and Stabilization Program known by the acronym HASP.

HASP payments, worth between $6.5 billion and $8 billion annually, are the lucrative carrot to get the state's 99 healthcare systems and hospitals on board with Medicaid expansion, as well as forgiving about $4 billion in medical debt owed by an estimated 2 million low- and middle-income households.

HASP payments are calculated based on in-network Medicaid managed care payments to acute care hospitals, critical access hospitals, and hospitals owned or controlled by the UNC Health Care System and ECU Health Medical Center.

The final version of the U.S. Senate reconciliation law eliminates the HASP payments.

NCDHHS projects North Carolina losing nearly $40 million in federal Medicaid funding over 10 years.

Another key factor is what happens if CMS' share of Medicaid expansion administration expenses drops below 90%, as which has the support of a majority of congressional Republicans.

North Carolina's healthcare systems and 99 hospitals are paying the remaining 10% through an assessment estimated at a combined $550 million for 2024.

The N.C. Medicaid expansion law states that a CMS commitment below 90% would trigger the dissolution of expansion unless alternative funding sources can be secured.

To secure support for HB76 from Republican legislative leaders, in particular Berger, they insisted no state taxpayer money could be used to pay for expansion administrative expenses.

The N.C. Healthcare Association said that every 10% drop in CMS funding commitment represents a $550 million shortfall. If the percentage falls to 60% support, the funding gap would be $1.65 billion annually.

"All of us — state elected and appointed leaders and healthcare partners — worked hard to ensure expansion was done the North Carolina way by tailoring the program to our state's needs and not putting any additional burden on North Carolina taxpayers," NCHA said.

"If Congress shifts more of the cost to the states, even by just a few percentage points, North Carolina hospitals will financially be unable to cover the additional cost."

Papering over

What makes the pending Medicaid cuts so deep and widespread is that the United States "lacks a functional health care system that is capable of serving all Americans in an affordable way," said John Quinterno, principal with South by North Strategies Ltd., a Chapel Hill research company specializing in economic and social policy.

"A system that also allows medical professionals to treat their patients as they see best and for local providers to meet the needs of their communities."

Quinterno said congressional Republicans' stance on the Affordable Care Act has been for "repeal and replace," yet the reconciliation bill "repeals without offering any replacements."

"Democrats, meanwhile, have limited their view to tweaking the Affordable Care Act without addressing the fundamental flaws in the health care system."

Quinterno said the ACA "has papered over some of those systematic flaws, largely through the expansion of the Medicaid program."

"The rollback of funding for Medicaid and other Affordable Care Act provisions, such as enhanced marketplace subsidies, combined with the imposition of administrative hurdles, will make those flaws more visible than they have been for some time."

As the Medicaid cuts roll out over the next 18 to 24 months, "many people will get a rude reminder that the United States' system of health care provision is unable to provide coverage or care to millions of people, irrespective of their age, income and employment status."

"Even people with insurance will find themselves unable to access care, especially if they live in rural communities where providers are unable to operate viably."

Legislature must step up

The Kate B. Reynolds Charitable Trust released its response to the reconciliation bill on July 7.

"New work requirements for people already working and stricter eligibility checks will threaten hundreds of thousands of Medicaid enrollees who could lose coverage due to technicalities and paperwork," according to the analysis.

"Increased paperwork will overwhelm the county Department of Social Services offices, especially in rural counties with staffing shortages."

"In some rural counties, more than half of the population is on Medicaid. Rural hospitals alone will see a $3 billion Medicaid cut."

The impact will be widespread across the state, according to the response.

"Make no mistake — we will all suffer when these cuts become law. Children will go hungry. Up to $700 million in costs will now shift to the state, potentially forcing NC to end SNAP.

"Behavioral health challenges will go untreated. People will not be able to visit a doctor. Rural hospitals will close. And, yes, people will unnecessarily die."

The trust said the N.C. legislature, as well as community support groups, "must step up and find resources to keep residents on Medicaid, continue the SNAP food assistance program, and invest in our residents and communities."

"If we don't, the long-term societal costs and consequences will be devastating."

"The Trust will continue to do everything we can to support equitable access to health care and to help people meet their basic needs.

"But philanthropy alone will never be able to fill this chasm — in fact, grantmaking across the state is a fraction of the resources needed to ensure North Carolinians have what they need to thrive."