Rural hospitals, nursing schools, and mental health support: How NC will spend its $1.7 billion Medicaid bonus

FAYETTEVILLE, NC - AUGUST 04: Cancer patient Caroline Whitley (L) smiles as nurse Colleen Kritz checks her breathing during chemotherapy treatment at the Cape Fear Valley Cancer Center August 4, 2010 in Fayetteville, North Carolina. Health care providers around the country are increasingly specializing their care by creating distinct treatment centers for various disorders and acquiring the latest high-tech medical equipment. (Photo by Chris Hondros/Getty Images)

By Michael McElroy

January 11, 2024

North Carolina expanded Medicaid last year in part because President Biden’s 2021 American Rescue Plan offered an extra financial incentive that will have equally huge effects on healthcare services, especially in rural areas.

Medicaid expansion was one of the biggest stories in North Carolina last year, with some 600,000 low income North Carolinians now in line to gain access to healthcare. 

A nearly decade-long saga of Republican resistance to expansion finally found a happy ending in the face of an idea that was simply too popular to hold out any longer.  But what’s less known is that a provision of President Biden’s 2021 American Rescue Plan helped provide the final push to the approval.

The American Rescue Plan offered included several financial incentives to the few states that hadn’t yet expanded Medicaid, including a $1.7 billion “signing bonus” that can be used however states see fit. 

North Carolina’s entire annual budget is around $30 billion.

And that money will have some equally huge effects on the state’s healthcare facilities and services, especially in rural areas.

Here is a quick and incomplete list of some of the ways the North Carolina General Assembly has chosen to spend its Medicaid “bonus.”

  • $350 million to colleges, universities, and nursing schools to bolster their programs and improve facilities.
  • $105 million for the construction of three new rural care centers.
  • $80 million for new mobile crisis teams and centers.
  • $80 million to support families caring for children with behavioral health or other special needs.
  • $76 million for the construction of a new UNC Children’s hospital in the Triangle area, including a children’s behavioral health hospital.
  • $73 million to other hospitals for various improvements.
  • $55 million for the North Carolina Community College System to help them create or expand nursing and other healthcare programs.
  • $50 million for the North Carolina Department of Health and Human Services to expand a loan repayment program and develop new incentives for healthcare workers who agree to practice in rural and underserved areas.
  • $25 million in loans to rural hospitals in a financial crisis to prevent them from closing.

The money is certainly needed.

Eleven rural hospitals in North Carolina have closed since 2015, and a study in 2020 showed that a third of the state’s rural hospitals overall were at risk of closing. 

Medicaid expansion itself provides protection against further closures, state health officials say, but the bonus money makes the shield even bigger. 

The funding is a good example of the underlying power behind budgets and policy. 

They aren’t documents of cold numbers and bottom lines, they are, as President Biden says often, documents of principle and priority, with real effects on people’s lives.

Author

  • Michael McElroy

    Michael McElroy is Cardinal & Pine's political correspondent. He is an adjunct instructor at UNC-Chapel Hill's Hussman School of Journalism and Media, and a former editor at The New York Times.

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