North Carolina’s 2023 Medicaid expansion was passed with the promise that it would pay for itself. Now that promise is in jeopardy. The time has come for the North Carolina General Assembly to uphold its own law, honor that safeguard, and begin an orderly rollback of expansion before it threatens the very foundation of the Medicaid program.
NC’S EXPANSION WAS NEVER MEANT TO BURDEN TAXPAYERS
When the General Assembly passed Medicaid expansion, it did so with some fiscally responsible safeguards. Lawmakers wisely ensured that the Medicaid expansion would be self-financed through a stream of provider taxes, primarily assessments paid by hospitals, rather than the state’s General Fund. Crucially, the law also included a fail-safe clause: If those dedicated revenues become insufficient, expansion “shall be discontinued.” That moment is now looming.
The new federal “One Big Beautiful Bill” (HR 1) rewrites Medicaid financing rules and undercuts the foundation on which North Carolina’s Medicaid expansion stands. It caps provider tax rates — reducing them from 6% to just 3.5% by 2032. This is the revenue stream that solidified expansion and the state’s share of expansion costs. Without the ability to fully leverage provider taxes, the General Assembly will face a painful choice: raid the General Fund or follow the law and unwind expansion.
Recently, Gov. Josh Stein told reporters that the General Assembly would have to get “creative” to find ways to keep the Medicaid expansion population on the books, which is approximately 650,000 able-bodied, working-age, childless adults.
The solution actually seems much more straightforward. Follow the law as it was intended. Otherwise, we risk jeopardizing the program that supports North Carolina’s seniors, the disabled, and children — those for whom the program was intended.
HOW DID WE GET HERE?
Medicaid expansion in North Carolina was a years-long political journey that culminated in a dramatic policy reversal in 2023. For more than a decade, Republicans in the General Assembly, led by Senate President Pro Tem Phil Berger and then-Speaker of the House (now Congressman) Tim Moore, resisted expansion under the Affordable Care Act, citing concerns about long-term costs, federal overreach, and the risk to state taxpayers.
But mounting pressure from hospitals, and assurances of a self-financing model led to a change of heart. Plus, the Biden administration offered a federal windfall of taxpayer money that was hard to resist. Berger, once the face of opposition, publicly explained his reversal in a 2023 opinion column, citing pragmatic reasons: The state could draw down billions in federal funds while covering its 10% share through hospital assessments, without touching the General Fund.
The compromise was written into Session Law 2023-7, which authorized Medicaid expansion under strict fiscal guardrails. It stipulated that expansion would proceed only if the costs were covered by dedicated revenues — primarily provider taxes — and included a mandatory off-ramp if those revenues ever fell short. Poison pill? Perhaps. But it got the votes they needed.The North Carolina Senate passed the measure in a bipartisan 44-2 vote, signaling a remarkable policy shift.
But now, with the passage of the federal “One Big Beautiful Bill” jeopardizing the provider-tax mechanism, that carefully negotiated structure is at risk. Expansion in North Carolina was never a blank check — it was a conditional agreement grounded in fiscal discipline. The conditions have changed. Lawmakers must now decide whether to honor the promises that made expansion possible.
JEOPARDIZING CORE MEDICAID PRIORITIES
Medicaid’s original intent was to provide a safety net for our most vulnerable neighbors — seniors in nursing homes, children in low-income families, and individuals with disabilities who cannot care for themselves. But under expansion, the program now devotes massive public resources to individuals who are generally healthier, more capable of employment, and are now competing for finite resources with those truly in need.
This shift represents a form of mission creep — and it risks degrading access and quality for the very people Medicaid was designed to serve. It also opens the door to waste and abuse. If the goal of this safety-net program is to provide support for those who cannot support themselves, then this growing expansion population runs counter to that principle.
North Carolina should not be forced into a bait-and-switch, where federal promises evaporate and state taxpayers are left holding the bag. The safeguard in state law is not just a policy option — it’s a legislative command. It is the firewall between responsible stewardship and reckless expansionism.
It’s time to follow the law. Upholding the safeguard is the only path that preserves Medicaid’s integrity and prioritizes those who need it most.
