NC braces for Medicaid work rules and higher SNAP costs. But it may get some help
AI-generated summary reviewed by our newsroom.
- North Carolina faces Medicaid cost hikes and SNAP funding shifts amid budget delay.
- Federal law imposes new Medicaid work rules, eligibility checks every 6 months.
- Rural health fund offers NC $500M opportunity despite looming provider payment cuts.
There’s still a lot of uncertainty about what North Carolina’s health budget will look like in the coming months after passage of a sweeping federal spending law earlier this year.
But some new federal funding could help out.
Much of that uncertainty centers on Medicaid — the federal-state program covering about 3.1 million North Carolinians — and on food benefits for low-income children and families. Adding to the uncertainty is that lawmakers have not passed a comprehensive state budget.
On Thursday during a meeting of the NC Child Fatality Task Force, Jonathan Kappler, deputy secretary for external affairs at the state’s Department of Health and Human Services, updated task force members on the federal law’s impacts — changes that will reach families and children across the state.
Funding work requirements
The One Big Beautiful Bill, passed by Republicans in Congress to enact President Donald Trump’s agenda, makes several financially significant changes to Medicaid. Those include prohibiting new provider taxes and lowering the cap on existing ones in states with Medicaid expansion. North Carolina funds much of its Medicaid share through provider taxes paid by hospitals and other providers.
The law also introduces work requirements for some adults covered under Medicaid expansion, a change which is slated to begin in early 2027, and moves eligibility checks from once a year to every six months.
Kappler said those shifts will add pressure to already strained county social services offices that process eligibility, increasing the risk of delays and coverage losses. The changes, and increased costs to the state associated with them, could also jeopardize Medicaid expansion, as previously reported by The News and Observer.
DHHS has been calling for additional funding since earlier this year, but top state appropriators leaders previously told The News and Observer they were still reviewing the bill’s impacts before making funding decisions.
Adding to the uncertainty, DHHS has said it will trim $319 million from Medicaid by October, citing underfunding of needs in the General Assembly’s budget. Reductions would come largely via cuts in rates paid to providers — which have broader effects on the program — and from some benefits, including coverage of GLP-1 drugs such as Wegovy for obesity and weight loss.
Deadlines for action on the work requirement funding are “squishy,” Kappler said. “We’ve basically been operating under the assumption that it’s going to be increasingly hard for us past the beginning of the calendar year, Jan. 1, for us to say that we’re not spending dollars on implementation of work requirements, which we technically don’t have the authority to do under state law.”
“We need to figure out what the funding is and have a change in state law that allows us to have funding dedicated to that purpose,” he said. Initial implementation could cost $150 million to $200 million before accounting for federal help, he said.
Sen. Jim Burgin, a Harnett County Republican and a task force member, suggested routing the new verification tasks through the state’s unemployment system instead of “setting up another whole work component.”
“We’re going to work something out. We’re going to try to make sure that the providers don’t take the cut,” he said.
Federal government to fund some costs
One new development: federal officials have indicated they are likely to fund the initial implementation of work requirements at a 90/10 split — with the federal government paying 90% and the state 10%, said Kappler.
“That significantly discounts the amount of money that we were on the hook for before,” Kappler said. “It feels like a very solvable problem for us to come up with a way to figure out a way to fund that initial implementation and administration.”
Burgin also flagged grocers’ concerns if Supplemental Nutrition Assistance Program (SNAP) benefits are cut, with the federal government requiring the state to pick up more costs under the One Big Beautiful Bill.
Burgin said he spoke with Food Lion and other chains that reported SNAP accounts for 11% to 18% of sales at some stores, with rural locations most exposed.
Congress also created a five-year, $50 billion rural health fund.
Half of that money will be split evenly among states — about $500 million for North Carolina — while the other half will be awarded competitively by the federal government.
DHHS expects the application within weeks and has begun stakeholder outreach.
“We can’t really necessary simply supplant funds lost” to the federal changes, Kappler said, “but there’s a lot of opportunity for us to leverage these funds to invest in technology that our rural providers may not have been able to have, to help them shift to a more sustainable model.”
This story was originally published September 4, 2025 at 6:31 PM.
