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No budget expected by next Friday, keeping Medicaid expansion on hold

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(The Center Square) – Ongoing budget deliberations will likely delay Medicaid expansion in North Carolina until at least December, though work is already underway to expedite the process.

The expansion, tied to budget approval by Gov. Roy Cooper, comes with significant federal funding lawmakers have signaled an intent to use for mental health initiatives. The timing has implications for some residents who may be removed from coverage that was expanded during the pandemic.

The North Carolina Department of Health and Human Services urged lawmakers to adopt a budget for the fiscal year that began July 1 by Sept. 1, to align with plans to launch Medicaid expansion on Oct. 1.

General Assembly leaders do not expect a budget by Friday of next week.

Both House Speaker Tim Moore, R-Cleveland, and Senate President Phil Berger, R-Rockingham, have suggested that is unlikely to happen as chamber leaders continue to negotiate budget details with no votes scheduled this week or next. State health officials have identified Dec. 1 as the “earliest fallback date” for launch with a budget beyond Sept. 1, and have already began a required public comment period to move ahead.

Expansion would loosen eligibility requirements to allow about 600,000 low-income residents to enroll in Medicaid. State health officials are working to verify eligibility for about 300,000 ahead of the launch through data from federal food assistance programs and the credit reporting service Equifax, according to Department of Health and Human Services Secretary Kody Kinsley.

That work is on top of efforts to verify eligibility for current Medicaid beneficiaries following the end of a federal pandemic requirement that prevented the reviews in exchange for increased funding. The Kaiser Family Foundation estimates the reeligibility reviews could remove about 372,000 North Carolinians from Medicaid over the next year, including some that may become eligible under expansion, while state health officials suggest the number is closer to 300,000.

Through July, the state Health Department has deemed 8,637 ineligible to continue, and ended coverage for 59,762, the latter mostly for failure of beneficiaries to provide requested information, according to state data. The unwinding will ultimately result in a statewide review of more than 2.5 million renewals, with nearly 600,000 initiated and 330,000 complete through July.

North Carolina Medicaid enrollment grew by 797,000 during the pandemic because of the federal government’s continuous coverage requirement. Federal officials extended an enrollment period for the federal health insurance marketplace to allow those impacted by the unwinding to apply for coverage through June 2024.

North Carolina’s Medicaid expansion will be funded 90% from the federal government, and 10% from increased hospital assessments, which are offset by higher reimbursements through a Healthcare Access and Stabilization program. That program would bring $8 billion in federal funds annually to North Carolina, as well as $1.8 billion in extra funds for other health care supports and an additional $1.8 billion bonus if the program launches alongside Medicaid expansion this year. Kinsely has warned the state could lose $60 million in federal HASP funding if the program doesn’t launch with Medicaid expansion.

Republican lawmakers introduced legislation to spend $1 billion of the bonus on an array of mental health services, signaling an intent to meet the deadline. House Bill 855, currently in the House Appropriations Committee, would spend $60 million on developing crisis facilities for people with mental illness, $80 million to transport psychiatric patients to hospitals, $40 million to expand school-based behavioral health services, additional funding for foster care, mental health in the court system, and mobile crisis services for youth.

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