Since its expansion in 2023 to working individuals living below the poverty line, Medicaid now provides affordable healthcare coverage to more than three million North Carolinians.[1] While comprising only 19% of the state population, nearly 37% of Medicaid enrollees are rural residents, consisting of over half the total populations of Swain, Richmond, Vance, Scotland, Robeson, Bladen, and Edgecombe counties.[2] Medicaid coverage in these communities is vital: without it, most individuals currently covered under Medicaid would be left uninsured.[3] Additionally, hospitals and clinics depend on Medicaid reimbursements to remain financially viable and to cover unpaid costs from uninsured patients.[4] Six rural hospitals have closed in North Carolina since 2015, leaving only 56 remaining throughout the state—ten of which are at risk of closure.[5] As more hospitals and clinics close, patients must travel further to receive treatment. For example, in rural North Carolina, the average distance to a hospital with a NICU for a rural resident is approximately 32 miles, compared to 14 miles for metropolitan areas.[6] Cancer treatment and cardiology care are more than 21 and 23 miles away, respectively.[7] As services move further away, they become less accessible: the result is a greater rate of untreated illness and, inevitably, an increase in preventable early deaths.
North Carolina’s Medicaid program is currently in crisis. In 2025, the North Carolina General Assembly adjourned without passing a budget—the only state in the US to do so.[8] Plagued by Republican in-fighting over taxes and facing an impasse, the Assembly passed a “mini-budget,” which included $600 million for Medicaid rebasing and the Medicaid Oversight Fund.[9] According to a statement released by NC Health and Human Services (NCDHHS) Secretary Dev Sangvai, however, this appropriation is significantly less than Medicaid’s operating budget, resulting in a funding deficit of $319 million.[10] Governor Josh Stein has indicated he is in support of a bill authorizing additional funding or tapping into the state’s Medicaid Contingency Reserve.[11] Both the House and the Senate separately passed bills attempting to authorize an additional $190 million in funding,[12] but were unable to reach an agreement on a singular solution to become law.[13] Without additional funds, Medicaid is predicted to be insolvent by April 2026.[14]
In response to the General Assembly’s failure to appropriate additional funds and in an attempt to stretch the existing reserve, the NCDHHS implemented reimbursement rate cuts on October 1, 2025, ranging from 3-10%.[15]Under these rate reductions, the amount that healthcare providers are reimbursed for providing services to Medicaid beneficiaries are diminished, meaning they are paid a lower percentage of the billed rate for each service rendered. Many rural hospitals and clinics see higher volumes of Medicaid patients than metropolitan private practices and thus are dependent upon Medicaid reimbursements to remain in service.[16] A rate cut of ten percent could be debilitating for those providers, leading to more rural healthcare closures and exacerbating the existing accessibility issues.
Lawsuits were subsequently filed over the rate cuts, and on November 10, 2025, Wake County Special Superior Court Judge Clayton Somers granted a preliminary injunction to Medicaid beneficiaries receiving autism therapy services.[17] The injunction required NCDHHS to restore the prior Medicaid reimbursement rates, effectively freezing the planned rate cuts.[18] Judge Somers held that the rate cuts would result in the denial or delayed access to care, as the standard six-month wait time for ABA therapy was expected to double under the new rate cuts.[19] On December 10, 2025, bolstered by the injunction, Governor Josh Stein officially directed NCDHHS to restore the prior reimbursement rates.[20] While this serves as a temporary victory for Medicaid beneficiaries and providers, without a budget passed by the General Assembly, the Medicaid program continues to face a massive deficit and impending insolvency in 2026.
Recognizing the urgency of the situation, Governor Stein called on lawmakers to convene for a special legislative session on November 17, 2025.[21] Apparently able to agree on this issue, President Pro Tempore Berger and House Speaker Hall responded to Governor Stein in a joint letter, defining the special session as an unconstitutional and unjustified attempt to usurp legislative authority because the General Assembly was still technically in session.[22]However, House members were told not to expect voting sessions for the rest of the year, and only a limited number of bills were expected to be considered for the remainder of the year, which does not include budget proposals.[23]
Entering the new year, it is clear that no attempts to pass a budget have been successful, and Medicaid funding remains in imminent risk of insolvency. Without any additional funding passed by the General Assembly, rate cuts in January are increasingly likely to occur, placing further strain on rural healthcare providers.[24] Further, without a budget passed, the health and livelihood of over three million North Carolinians—largely those living in rural communities—remain at risk. Considering that 2026 is an important election year for the General Assembly, if the wellbeing of their constituents is not incentive enough, perhaps the looming fate of unemployment will motivate legislators to resolve their stalemate and pass a budget.
[1] What Medicaid Does, NCDHHS, https://medicaid.ncdhhs.gov/about-nc-medicaid/what-we-do#:~:text=What%20Medicaid%20Does,than%20three%20million%20North%20Carolinians (last visited Jan. 7, 2026).
[2] Id.
[3] Id.
[4] Id.
[5] Rural Hospitals at Risk of Closing, Center for Healthcare Quality and Payment Reform, https://chqpr.org/downloads/Rural_Hospitals_at_Risk_of_Closing.pdf (last visited Jan. 7, 2026).
[6] Vicki Shabo, Rural North Carolinians Face Disproportionately Long Travel Distances to Health Care, New America (Apr. 20, 2023), https://www.newamerica.org/better-life-lab/blog/rural-north-carolinians-face-disproportionately-long-travel-distances-to-health-care/.
[7] Id.
[8] Ella Moore, Republican Divisions Leave North Carolina Without a Budget Heading into 2026, The Chronicle (Dec. 23, 2025), https://dukechronicle.com/article/duke-university-north-carolina-general-assembly-does-not-pass-a-budget-income-tax-cuts-medicaid-20251223.
[9] Press Release, NCDHHS, NCDHHS Secretary Dev Sangvai Releases Statement on NCGA Spending Plan (Aug. 6, 2025), http://ncdhhs.gov/news/press-releases/2025/08/06/ncdhhs-secretary-dev-sangvai-releases-statement-ncga-spending-plan.
[10] Id.
[11] Adam Wagner, General Assembly will Ignore Stein’s Call for Special Session to Fund Medicaid, WUNC (Nov. 13, 2025), https://www.wunc.org/politics/2025-11-13/general-assembly-ignore-steins-call-special-session-fund-medicaid.
[12] See H.B. 562, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025); S.B. 403, 2025 Gen. Assemb., Reg. Sess. (N.C. 2025).
[13] Wagner, supra note 11.
[14] Id.
[15] NC Medicaid Rate Reductions – Effective Oct. 1, 2025, NCDHHS (Sep. 25, 2025), https://medicaid.ncdhhs.gov/blog/2025/09/25/nc-medicaid-rate-reductions-effective-oct-1-2025/
[16] Walter R. Hsiang et al., Medicaid Patients Have Greater Difficulty Scheduling Health Care Appointments Compared with Private Insurance Patients: A Meta-Analysis, 56 J. Health Care Org., Provision, and Fin. 1, 2 (2019).
[17] Abigail Harrison, NC Judge Halts Medicaid Cuts for Autism Services, Law360 (Nov. 20, 2025), https://www.law360.com/articles/2413739.
[18] Id.
[19] Id.
[20] Press Release, Office of Governor Josh Stein, Governor Stein Continues to Stand Up For 3 Million Medicaid Patients In North Carolina, Directs NCDHHS to Restore Medicaid Rates (Dec. 10, 2025), https://governor.nc.gov/news/press-releases/2025/12/10/governor-stein-continues-stand-3-million-medicaid-patients-north-carolina-directs-ncdhhs-restore.
[21] Galen Bacharier, Gov. Stein Calls for Special Session to Fund Medicaid as GOP Lawmakers’ Disagreements Persist, NC Newsline (Nov. 6, 2025), https://ncnewsline.com/2025/11/06/gov-stein-calls-for-special-session-to-fund-medicaid-as-gop-lawmakers-disagreements-persist/.
[22] Wagner, supra note 11.
[23] Id.
[24] Id.
