By Grace Vitaglione
Wednesday, the state lawmakers agreed to give NC Medicaid more money to cover its higher costs this fiscal year. But their number was about $81 million less than what state health officials had asked for.
The program helps low-income kids, some of their parents, and low-income adults. The state Department of Health and Human Services asked for almost $500 million to cover all of its costs for the coming year.
But the General Assembly only agreed to a “mini” budget this week, which included only $277 million in regular funds and an extra $100 million in one-time funds to cover the $458 million that was asked for.
Gov. Roy Cooper could veto the bill, but it’s possible that the legislature would still pass it anyway.
People who get care because of Medicaid growth do not use state money to pay for it. There are different places where the money for that comes from.
House Speaker Tim Moore (R-Kings Mountain) said that if there is a shortfall, it probably won’t happen until 2025, when the lawmakers would be back in session and be able to add more money.
Small changes, big dollars
Medicaid costs in North Carolina are mostly covered by the federal government, which gave 65.91 cents of every dollar spent this fiscal year. The matching fund rate will go down to 65.06 cents for every dollar next year. Even that small change can make a huge difference in a program like Medicaid.
The state needs some of the money DHHS asked lawmakers for because it will get $136 million less from the federal government.
DHHS says that the rest of the $458 million that was asked for is mostly due to rising health care costs.
NC Every year, Medicaid costs change, and DHHS makes predictions about how they might change. Then, based on those predictions, they ask the lawmakers to make changes to the budget. This is called the “rebase.”
DHHS says that some of the things that make the Medicaid program expensive are provider rates, managed care plan rates, and new technology.
Now, the department is thinking about how to run the Medicaid program with a $81 million gap and no extra money to pay for the costs of moving the program from being run by the state to being run by big insurance companies.
A new Children and Families Specialty Plan is being planned, which will help more than 30,000 foster children and some of their family members. This will add to the cost of doing business.
And on top of that, the department works with an enrollment brokerage company to help people join managed care plans. A department representative wrote in an email that the department also handles a number of important technology and operations contracts, which make things easier for county partners in terms of administration.
Melanie Bush, deputy head of the state’s Medicaid program, told NC Health News this summer that something else could change with the NC Healthy Opportunities pilots. In these programs, people on Medicaid can get help with food, transportation, or housing. She said that plans to bring that program to the whole state might have to be put on hold.
Hashing out the budget
In North Carolina, officials make a budget for two years right after an election every other year if the number of years is odd. Then, in the second year of the congressional biennium, they usually go back to change the budget and add money for projects that people want.
But lawmakers left Raleigh earlier in the summer without making that change to the budget for the second year. The gap was bigger because no money was allowed at that time. At the time, Rep. Donny Lambeth (R-Winston-Salem) said that Medicaid funds might have run out in the spring.
The leader of the Senate, Phil Berger (R-Eden), said that the amount of money that the legislature agreed to spend on Medicaid was determined by the General Assembly’s nonpartisan fiscal research section.
“It’s not unusual for the agency and other people to disagree on some things,” he said. “But in this case, we relied on our nonpartisan staff to give us a number, and that amount is in there.”
Even though the amount of money passed this week is too small, Medicaid won’t be totally broke if the governor doesn’t veto it. A spokesperson for the DHHS said that the department plans to handle the gap by working with partners in a “collaborative and transparent” way.
Why does NC Medicaid need more money?
Bush said that the need to rebase is due to more people joining the program, more expensive drugs like Wegovy, more payments to managed care companies, and more services.
A spokesperson for DHHS said that money is also needed to improve the IT support for Medicaid and other public benefits that go with it.
On Monday, Senator Lisa Grafstein (D-Raleigh) said in front of the whole Senate that changes to the Medicaid system can make it hard for people to get the care they need.
She said, “People who depend on Medicaid can’t just spend their savings.”
Grafstein also said that the mini-budget doesn’t help the almost 18,000 people who are waiting for an Innovations waiver. This waiver lets people with intellectual and developmental disabilities get Medicaid programs that help them stay at home. It’s been over ten years for some of those people to get into the program.
Last year, the legislature added money for 350 more Innovations waiver spots, but that was all.