State budget heavy on health care spending

Update Sept. 22: Gov. Roy Cooper announced Friday morning that he will let the budget become law without his signature, largely because it expands the Medicaid benefit to more than a half million people. “Make no mistake, overall this is a bad budget,” Cooper said. “However, we must recognize this irresponsible legislature’s decade of refusal to expand Medicaid, which has caused life and death situations for so many North Carolinians and threatened the very existence of numerous rural hospitals. I will not allow people who are crying for help to wait any longer…”

By Anne Blythe and Rose Hoban

It almost seemed anti-climatic Thursday afternoon and early Friday morning when lawmakers voted on the nearly $30 billion state budget. 

The spending plan — flush with hundreds of millions of dollars for mental and behavioral health care, a new children’s hospital “somewhere in the Triangle,” crisis pregnancy centers, a new rural health program, enhancements to the medical examiner and autopsy system, health care workforce incentives, Medicaid expansion and more — was approved along party lines with little fanfare. To make it official, one more vote is needed by the Senate today before the bill is sent to the governor.

Only a week before the vote, Senate leader Phil Berger, a Republican from Eden, and House speaker Tim Moore, a Kings Mountain Republican, brought a backroom impasse over legalizing casinos in the state into the public eye. But in a dramatic turn of events on Tuesday, Berger gave up his insistence that casinos be included in the final budget deal. 

“It’s a budget that makes record expenditures in, in multiple areas, significant pay raises, many of them are targeted to areas that we are seeing specific needs,” Berger said on Thursday after his chamber took their initial vote on the plan. 

The Senate leader pointed out that because North Carolina will expand Medicaid once the budget becomes law, more than $1.4 billion in federal dollars will flow into state coffers as a result of the federal enticement dangled in front of states that have not yet expanded the program. 

Berger called that money a “record amount that will be coming in North Carolina, as a result of Medicaid expansion, that will be going into mental health and other health aspects.”

Democrats opposed the overall budget plan, in part, because they said it did not do enough to bolster teacher pay, that it expanded the amount of public tax dollars funding vouchers for private schools and that it left state offices struggling to hire workers in the wake of the pandemic, limited access to public records held by lawmakers and further politicized the state’s court system.

The biennial spending plan raises the pay of state workers 4 percent this fiscal year, including back pay for July, August and part of September. The plan calls for a 3 percent increase next fiscal year.

UNC/ECU health care changes

The spending plan is crammed full of new policies, many of which never had a public vetting before the budget documents were released this week. Those policies include substantial changes to the UNC and East Carolina University health care systems and their medical and dental schools — from new procedures for how the governing boards are selected to the classification, benefits and state laws governing the employees.

Employees in the health care system and on the medical and dental school faculties have been classified as state workers for decades. Those who are currently in the state employment system will have a one-time choice of remaining in the state employee health plan and the state retirement system or enrolling in new benefits being offered by UNC and ECU. 

However, anyone hired after Jan. 1, 2024 no longer will be considered state employees subject to most of the state personnel act, although they will be prohibited from engaging in collective bargaining, the same as existing state employees. The employees will serve at-will. 

Suzanne Beasley, a lobbyist and director of public relations for the State Employees Association of North Carolina, told NC Health News in a phone interview on Thursday that her organization is concerned about what the new classifications for the health care systems will mean for the strength of the state health plan, which could lose tens of thousands of high-paid employees over time.

“I think there’s a whole lot of shaking out, to see what this will do,” Beasley said.

Beasley added that UNC had been asking for this flexibility for some time, saying it would help them recruit a wider range of physicians and other employees.

The state budget plan calls for UNC and ECU to collaborate on creating a new rural health initiative that will spend $210 million on three clinics in rural areas, plus $150 million for hospital investment and another $50 million for a regional children’s behavioral health hospital to be developed at an undetermined site in the Triangle.

First look for most

The spending plan, all 1,400-plus pages, was rolled out for the public and for Democratic lawmakers to see Wednesday evening.

Republicans, such as Sen. Kevin Corbin of Franklin, described the spending plan as a “historic” investment in health care.

Democrats, who have advocated for some of the health care initiatives included, said the budget was laden with too many policies — including zeroing out corporate taxes — that make sweeping changes that they thought should have been debated and voted on in separate bills.

“We can’t afford to make these further spending cuts, and not expect structural deficits and the resources available to us to do the fundamental services in the state,” said Senate minority leader Dan Blue (D-Raleigh). “It’s critical to maintain a stable tax base. You heard almost a fourth of the state workforce and positions are vacant — 20 to 25 percent are vacant. And I suggest to you that when you hand out pay raises to judges and high-ranking officials on the order of 20 percent, then give teachers, clerks, bus drivers, prison guards a 7 percent pay raise? It’s spitting in the eyes of state employees that we so depend on.”

The budget allows for the expansion of Medicaid to some 600,000 people in North Carolina — mostly low-paid workers who now will be able to get health care benefits provided by the federal and state governments.

In March, lawmakers passed a law that opens the Medicaid rolls to these potential beneficiaries, and the governor signed it amid much pomp. There was one caveat: The new benefit was tied to the adoption of a state budget, something Gov. Roy Cooper, a Democrat who has long advocated for expansion, has the power to veto, approve or allow to become law without his signature.

A spokesperson for Cooper said on Thursday they were still looking at the budget and were not prepared to say what action the governor might take.

There’s plenty for Cooper to like in the plan, along with the poison pills. The General Assembly spent much of the federal bonus on mental health priorities, such as $20 million in bonuses and incentive pay for workers in the state’s psychiatric hospitals in addition to the state employee raises. The spending plan also increases rates paid to mental health and substance use service providers to the tune of about $130 million over the coming two years. 

The plan also gives the N.C. Department of Health and Human Services more control over state-funded local mental health agencies. State health leaders have long said they’ve wanted to stabilize and strengthen the state’s mental health system. The policies included in the new spending plan will also allow people who are unhappy with the services they’re receiving from their local mental health agency to switch providers — something that’s not been available before. 

Child welfare advocates have been pushing for years for more support for troubled families with children with mental health needs, and the budget puts $80 million over the coming two years into support services for those families.

The budget also increases rates paid to nursing homes by more than $170 million.

Big-ticket budget items 

Other health care expenditures in the budget include:

• $10 million for 350 new slots in the Innovations Waiver system, which provides community-based care for people with intellectual and developmental disabilities. 
• More than $20 million in total expenditures on crisis pregnancy centers aimed at women who might be seeking abortions. 
• $4.8 million to free and charitable clinics across the state. 
• $3.2 million in each year of the biennium for Durham-based substance use program TROSA.
• Increases in the fees paid to the Office of the Chief Medical Examiner for autopsies, creation of a new autopsy center in the southern Piedmont,  an additional $4 million in funding for the Medical Examiner over the biennium and money for a toxicologist. 
• $7 million over the biennium for digitizing birth certificates and other vital records.
• $18.75 million for youth tobacco and vaping cessation programs.

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