NC Medicaid spending nears $42B after 93% growth in 4 years

Medicaid spending in North Carolina has nearly doubled over the past four years, increasing total spending to a record $41.6 billion.

The new state budget fully funds the state’s projected Medicaid obligations for the coming fiscal year by authorizing nearly $41.6 billion in spending. That total includes federal funding, state appropriations, provider assessments, and other receipts used to fund Medicaid operations.

Of the $41.6 billion in spending, the state is funding $7.46 billion, with the remaining $34.1 billion from federal funds, provider assessments, and other receipts.

Only four years ago, the division’s total budget was $21.6 billion. Since then, it has increased by roughly $20 billion, or nearly 93%.

Over the same period, the state’s General Fund appropriation rose from $4.71 billion to $7.46 billion, an increase of roughly 58%.

Brian Balfour, senior vice president of research at the John Locke Foundation, said Medicaid expansion has been the primary driver of the recent increase.

“The dramatic rise in Medicaid spending over the past four years can largely be attributed to expansion,” Balfour told Carolina Journal. “Since December of 2023, more than 730,000 people have been added to the Medicaid rolls just through expansion. Combine that with increasing costs of coverage per person, and we see this explosion in overall costs.”

North Carolina launched Medicaid expansion in December 2023, extending eligibility to adults earning up to 138% of the federal poverty level. The federal government covers 90% of benefit costs for the expansion population.

Balfour said the surge may begin to moderate as enrollment expansion stabilizes.

“As the expansion population begins to level off, I expect the growth of Medicaid spending to likewise slow down, but the program has established a markedly higher baseline these past few years,” he said.

When federal funding and other receipts are included, Medicaid accounts for roughly half of the spending listed for agencies supported through North Carolina’s General Fund budget.

At $41.6 billion, the program’s total budget is also more than one-and-a-half times the combined $25.6 billion budgeted for K-12 schools, community colleges, the UNC System, and the state’s residential schools. It is also nearly three-and-a-half times the total amount spent on Hurricane Helene recovery so far.

Under the new budget agreement, the program accounts for nearly 22% of the General Fund, up from 16% a decade ago.

“Medicaid continues to chew up a larger portion of state spending because it is growing at a faster rate than the overall state budget,” Balfour said. “This means that other spending priorities, like teacher and state employee raises, disaster relief, and public safety, have fewer dollars available to fund them.”

The growth places Medicaid at the center of the state’s broader spending debate as lawmakers balance the cost of maintaining health coverage with demands for education funding, public safety investments, employee raises, tax relief, and Hurricane Helene recovery.

Balfour said the rising obligation could become more difficult to manage if the economy weakens.

“Medicaid’s growing financial pressures are especially concerning when considering a potential economic downturn in the near future,” he said. “The obligations will grow as more people lose their jobs and turn to Medicaid, while the ability to raise revenue to fund the growing obligations will decrease due to the downturn.”

House Speaker Destin Hall, R-Caldwell, also raised concerns about Medicaid’s trajectory in an interview with Carolina Journal before the start of the 2026 legislative session.

“Medicaid is a program that should be available for those as a safety net while they need it, but not forever,” Hall said. “It’s not a lifetime program.”

Hall accused Democrats and Democratic governors of placing too much emphasis on increasing enrollment.

“Our friends on the other side, the Democrats, and under the Democratic governors Roy Cooper and Gov. Stein, it seems that their purpose with the program is to see how many more people they can get on it,” Hall said. “The better metric to use on Medicaid is not how many more people we are getting on it. It is how many people are we getting off of it.”

He also pointed to a roughly $1 billion Medicaid cost overrun lawmakers faced ahead of the session.

“A billion-dollar cost overrun in Medicaid in this state, and that’s not sustainable,” Hall said. “It’s just simply not. We can’t print money, and so we’ve got to get our arms around this problem.”

The increase in funding is accompanied by new oversight and program-integrity provisions.

The budget provides $2.5 million in nonrecurring funding to the State Auditor’s Office to investigate waste and abuse in Medicaid and assist with an audit required under legislation passed earlier this year.

The budget also requires stronger cost-containment provisions in Medicaid managed care contracts, along with additional reporting requirements and consequences for plans that fail to meet cost-control targets.

Beginning Oct. 1, the Department of Health and Human Services must conduct quarterly checks of income and other financial information that could affect a recipient’s eligibility.

“NC Medicaid spending nears $42B after 93% growth in 4 years” was originally published on www.carolinajournal.com.