North Carolina needs a budget or Medicaid overhaul would be delayed, lawmakers told

Oct. 23--RALEIGH -- The secretary of the North Carolina Department of Health and Human Services sounded the alarm Wednesday on the need for a state budget soon so a major health-care overhaul can stay on time -- and not cost more money.

Almost four months into the new fiscal year, the state is operating on last year's budget and a series of "mini-budgets" that fund selected areas. The state House voted to override Gov. Roy Cooper's veto of the full budget, but the state Senate so far hasn't followed suit.

At stake for DHHS is moving existing Medicaid recipients to a managed-care system in which the state contracts with private health insurance companies. A delay will cost money as well as a loss of the agency's ability to recruit and retain talented workers, DHHS Secretary Mandy Cohen told lawmakers during a House Health Committee meeting on Wednesday.

But it's about more than just starting the $6 billion-a-year Medicaid managed care system, said Cohen, a member of Cooper's cabinet.

"We need to be able to sustain this work into the future, and that means stability for our department," she said. "There is no scenario in which it won't impact services, which means it impacts safety."

She said that beyond Medicaid transformation, not having a fully funded budget destabilizes the department, making it harder for its staff to do all their work.

Cohen said they need a budget by mid-November or will have to wind down work already begun on Medicaid transformation.

So far, 70,000 Medicaid recipients in North Carolina have enrolled in a plan, and thousands more have until Dec. 13 to choose one, or the state will choose a plan for them. There are five insurance companies contracted by the state for the new managed care system: Blue Cross and Blue Shield of North Carolina, AmeriHealth Caritas North Carolina, UnitedHealthcare of North Carolina, WellCare of North Carolina and Carolina Complete Health.

Rep. Donny Lambeth, a Winston-Salem Republican, said there may not be a budget that satisfied everyone.

"We don't have a budget. We don't have a transformation bill that was approved. And I think we have to adjust to that reality. I don't think it's likely we'll have one, quite frankly," Lambeth told Cohen on Wednesday.

Cooper, a Democrat, vetoed House Bill 555, a mini-budget bill that would have funded Medicaid transformation. While the policy decision to move to managed care is a done deal, it needs designated funding.

Cooper blocked HB 555 in late August at the same time he approved other "mini-budgets" that Republicans have moved through the legislature during the budget impasse. Most of those spending bills mirror pieces of the budget passed by the Republican-led General Assembly, which also wrote the budget.

"Passing mini-funding bills that simply divvy up the vetoed Republican budget is a tactic to avoid a comprehensive budget that provides for health care and other important needs like education," Cooper said in a statement when he vetoed the bill.

"Health care is an area where North Carolina needs us to do more, and to do it comprehensively, Cooper said.

Cooper vetoed the state budget this past summer primarily over the lack of Medicaid expansion in it. The House has proposed its own Medicaid expansion compromise, led by Lambeth, that would include a work requirement and premium, though it's not clear if that bill has significant support from either party.

Regardless of the Medicaid expansion issue, the move to managed care may be delayed as the budget remains stalled.

Medicaid managed care delay

Lambeth told Cohen he was very concerned about the Feb. 1 planned start date for managed care.

"I just don't see how that's possible. I would advocate for some realistic review of the schedule," Lambeth said, and suggested pushing it off to July 1.

"I know you don't want to do that and I know there's consequences of delays," he said. "I'm as anxious as anyone."

Thomas Johnson of Southeastern Health also told lawmakers that he doesn't think the current timeline will work to start the program.

Delaying the start to July 1 would result in a significant cost, Cohen said.

"If we don't have a budget by the middle of November, we'll have to start to wind down work ... and will lose talented people," Cohen said. She said contractors may have moved on to projects in different states by the time they start back up.

"Any delay has a cost, a financial cost," she said. Cohen said she doesn't have an estimate yet of that cost, and hopes a budget can be worked out before mid-November.

Rep. Verla Insko, a Chapel Hill Democrat, said she supported Lambeth's suggestion of pushing back the start date.

Rep. Gale Adcock, a Cary Democrat, said negotiating a budget compromise is another option instead of delaying the managed-care change.

For more North Carolina government and politics news, listen to the Domecast politics podcast from The News & Observer and the NC Insider. You can find it on Megaphone, Apple Podcasts, iHeartRadio, Stitcher or wherever you get your podcasts.

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