Gov. Stein Orders Medicaid Rate Restoration as Budget Stalemate Deepens

Gov. Josh Stein on Wednesday directed the North Carolina Department of Health and Human Services to restore Medicaid reimbursement rates to their Sept. 30, 2025, levels, saying recent court rulings have made the state’s October rate cuts untenable and have put patient access at risk.

The move comes as the General Assembly remains locked in a months-long budget impasse — making North Carolina the only state in the nation without an enacted budget — and as Medicaid providers and advocacy groups warn that the underfunded program is nearing a crisis point.

“North Carolinians who rely on Medicaid are suffering because the General Assembly has failed to fully fund the program,” Stein said. “The $319 million funding gap remains. The General Assembly must act to fully fund Medicaid and protect health care for more than 3 million North Carolinians.”

NCDHHS Secretary Dev Sangvai echoed those concerns, saying the program’s financial uncertainty “threatens the health of our entire state.”

NCDHHS has warned for months that Medicaid was left hundreds of millions of dollars short. With multiple lawsuits filed over the October rate reductions — and court orders curbing the department’s ability to manage the shortfall — the agency said the cuts could no longer continue. Without legislative action, Medicaid is projected to exhaust its available funding before the end of the fiscal year.

Health systems, pediatricians, mental health providers, substance-use programs, disability organizations, home-care agencies, and professional associations issued statements applauding Stein’s decision. Many said the restored rates are essential to keeping clinics open, stabilizing the workforce, and preserving access to care for children, older adults, people with disabilities, and low-income families.

“An encouraging step toward stability,” the North Carolina Healthcare Association said. The NC Pediatric Society called the move “critical for pediatricians across our state.” The Addiction Professionals of North Carolina said the reversal “will save lives.” Others warned that lasting solutions will require the legislature to close the funding gap in the new year.

The North Carolina House of Representatives, however, sharply criticized Stein’s action and said the administration created the crisis. House leaders argued Medicaid is adequately funded at least through April 2026 and accused Stein of pushing “unnecessary” cuts that triggered litigation.

“Gov. Stein manufactured a crisis out of thin air,” said Rep. Larry Potts, R-Davidson, a health appropriations co-chair. Senior appropriations chair Donny Lambeth, R-Forsyth, said the governor’s reversal “recognizes” the negative impact of the reductions but insisted lawmakers had already taken responsible steps to support the program.

Republican leaders said they will continue monitoring Medicaid spending and will act “if a verified shortfall emerges.”

For now, restored rates return some stability to a program serving more than 3 million residents — but the funding fight behind them remains unresolved.