Children’s hospital caught in North Carolina budget battle as lawmakers seek to close funding gaps

By HPN Staff

North Carolina lawmakers remain deadlocked on the state budget, with Medicaid funding and support for a new children’s hospital at the center of the standoff between the two chambers. 

The House has proposed $500 million for Medicaid, while the Senate has pitched $640 million, plus $50 million for administrative costs. Both proposals fall short of the $819 million Medicaid leaders said was needed earlier this year, and a “mini budget” passed over the summer only allocated $600 million. 

The Senate also tied Medicaid dollars to state funding for a new Apex, N.C.-based children’s hospital, a partnership between UNC and Duke, a move the House resisted. 

The children’s hospital would be the state’s first standalone pediatric facility. State leaders call the hospital a critical addition to North Carolina’s healthcare infrastructure, but without a clear funding path, its timeline and scope remain uncertain. The budget standoff has effectively placed the hospital in the middle of a broader political fight over Medicaid funding.

Lawmakers failed to reach an agreement, leaving both healthcare providers and patients in uncertainty. The next voting session is scheduled for late October. 

Why it matters

More than 3 million North Carolinians rely on Medicaid, which serves people with low incomes or disabilities. The budget impasse and shortfall in funding threaten reimbursement rates to providers. The state has already announced a minimum 3% reduction in payments, with some providers facing steeper cuts. Lower payments are prompting some doctors and clinics to stop accepting Medicaid patients, leaving residents with fewer options for care. 

If lawmakers cannot reach a compromise, patients covered under Medicaid may face longer wait times, limited provider choice, and gaps in essential care.

The big picture

North Carolina’s budget deadlock mirrors a broader challenge nationwide as federal Medicaid cuts take effect. Idaho has already implemented reimbursement reductions, while Michigan and Pennsylvania continue to debate how to make up for shortfalls in state budgets. The conflict underscores the growing tension states face between limited resources, rising healthcare costs, and the need to maintain access for vulnerable populations.

Colorado lawmakers met in an August special session to address a $1 billion shortfall. Laws passed included cutting Medicaid provider rates, increasing prior authorization requirements, utilizing reserve funds, and making cuts to higher education.