Trump Medicaid reform will cost NC tens of millions a year, say state Medicaid leaders

The North Carolina Legislative Building (Photo: Clayton Henkel/NC Newsline)

By: Laura Leslie–January 16, 2026

NC Newsline: The Medicaid reforms in President Donald Trump’s spending and tax cut bill may save North Carolina some money in the long run – but they’ll come with a hefty price tag up front.

That was the bottom line from Medicaid leaders at the N.C. Dept. of Health and Human Services to state lawmakers at a hearing Tuesday.

NCDHHS says the federal changes will require an additional $44.4M a year from the state for increased administration costs, plus another $6.5M this year to match the federal funding for implementation.

The healthcare program will face new eligibility and work requirements for the more than 700,000 Medicaid expansion enrollees beginning Jan. 1, 2027. State Medicaid COO Sarah Gregosky told a joint oversight committee the changes will require NCDHHS to upgrade its existing system to gather the data needed.

It will also require more staff at the county level, Gregosky said, to recertify benefits eligibility every six months, rather than annually.

“This is a complex technology, policy and process change for our systems, for our county caseworkers, for providers, for our beneficiaries,” Gregosky told the panel. “All of those system changes need to be in place prior to October.”

That upfront work, she said, needs to get underway soon to allow the state to design, test and deploy the system within the accelerated timeline required by the “One Big Beautiful Bill Act” law. But she said that’s complicated by the fact that federal Medicaid officials haven’t yet issued their official rules for the changes.

“The CMS guidance is not due out until June,” Gregosky told lawmakers, “which means that we need to make assumptions now based on what’s in the legislation, but guidance may come out in June that requires us to adjust some of those assumptions.”

“CMS has indicated while there is an allowance for an extension for states who are making good faith progress towards implementation, they do not intend to issue any of those extensions,” she added.

Assistant NCDHHS Secretary Melanie Bush said lawmakers will need to act to allow Medicaid access to additional funds, either through higher taxes on hospitals or by reallocating money from the General Fund or from other agencies, like the N.C. Dept. of Corrections, that have saved money due to Medicaid expansion,

“We need legislative action as soon as possible,” Bush said. “We need legislative action by early this year – by March 31, if possible – so that we can get the funding we need to build out these systems.”

Lawmakers’ reactions ranged from concern to skepticism.

“Timing here is, I think, an issue that we’re going to think through,” replied Chairman Rep. Donny Lambeth (R-Forysth). “This is just me talking, but I’m not sure we’ll be back before April, and so that’s something that we’re going to have to think about, talk about.”

Rep. Hugh Blackwell (R-Burke) said NCDHHS was failing to acknowledge the savings the reforms are intended to bring.

“By clarifying eligibility requirements, rather than expanding participants, you might be cutting back on participants,” Blackwell said. “The overall idea I’m getting from the department is you all feel that what you’re going to be required to do … is just busy work that’s going to add cost, and that there will be no savings anywhere as a result of all this new shuffling of policies.”

NCDHHS Medicaid chief Jay Ludlum took issue with that characterization.

“We are not trying to imply that there would not be offsetting costs and that this is purely busy work,” he said.

“I don’t know where the savings are going to fall over time, but at least initially, there will have to be some investments to get there,” Ludlum said. “We do have to build, in part, a system that doesn’t exist yet.”

According to NCDHHS, NC’s Medicaid program is already some $319M in the red due to underfunding for the current fiscal year, and will likely run out of money sometime this spring.

Republican legislative leaders don’t agree with that assessment. They’ve promised to supply more funding if needed, but so far, state House and Senate leaders have been unable to reach an agreement on a spending package. https://ncnewsline.com