US House plan: Hurting North Carolinians’ wallets and well-being

North Carolinians want their policymakers to keep rising costs in check and make their lives better — not worse.  Yet some policymakers continue to rig the rules so that the rich get richer, leaving the rest of us without the supports we all need in hard times — like help getting to the doctor or putting food on the table — and without the public institutions that keep our communities and economy on level ground, moving forward.

This week, US House Republicans advanced legislation for the largest cuts to Medicaid and SNAP in the programs’ history. These proposals threaten both the well-being and wallets of North Carolinians:

• At least $625 billion in Medicaid cuts, including new work requirements for people who are covered under the Medicaid expansion, red tape that will reduce coverage, and restrictions on how states like North Carolina raise money to pay for Medicaid, among other changes.
• Roughly $300 billion in SNAP cuts, including new harsh work requirements for parents of school-aged children and for older adults, and for the first time in the 50-year history of the program, a requirement that states pay for a share of the food benefits, shifting the cost to states.

These devastating cuts to health care and food assistance for people across our state is being done to pay for a federal tax plan that would increase deficits by $3.8 trillion over 10 years — while providing an average tax cut of $65,000 for people with incomes in the top 1 percent and doing little for low- and moderate- income families.

These harmful and unpopular choices by Republican leaders in Congress aren’t necessary. The US Senate and President should recognize that their power ultimately comes from the people who elect them — people whose lives will be made worse if this plan goes ahead. They can — and must — stop these cuts from becoming law.

North Carolinians will lose health care coverage, face deeper hunger

If enacted, the proposed changes would strip hundreds of thousands of North Carolinians of vital supports and erect new barriers to health, employment outcomes, and well-being. The primary policy used by Congressional leaders are harsh work reporting requirements — which are costly and difficult to administer — that ignore the reality of today’s labor market, where many workers face unstable work schedules or frequent moves in and out of work.

Preliminary analysis suggests between 244,000 and 496,000 North Carolinians would have their health insurance taken away by harsh work reporting requirements in the US House plan, which would apply to everyone enrolled in Medicaid expansion aged 19 to 64 (which covers the entire expansion age range.)  Evidence from failed experiments with work requirements shows about two-thirds of those enrollees losing coverage are likely to be workers or people who should be eligible for an exemption, such as people attending school or living with disabilities.  That’s because many people would not be automatically exempted and would lose coverage due to red tape. States would also be able to require complex monthly reporting, failing to recognize the precarious nature of work for many across our North Carolina.

These health care losses reflect only one aspect of the legislation. In addition to costly work reporting requirements, the legislation allows enhanced premium tax credits to expire that helped make health care more affordable through the Affordable Care Act (ACA) marketplace.

Further undermining well-being, mark-ups from the Agriculture Committee propose expanded work reporting requirements for SNAP benefits. These target adults with school-age children and adults aged 54 to 65 — despite widespread shortages in child care for children of all ages, and the fact that most SNAP recipients are already working.

• North Carolina has not stepped up to ensure the availability and affordability of child care — including afterschool care — in every community. These work requirements fail to address the fact that many people are out of work because they need to care for their family.
• The vast majority of households receiving food assistance do work — In SNAP households with children where the adult is working-age and not disabled, 92 percent of households reported earnings in 2023.

These new work reporting requirements will push people off food assistance unnecessarily across North Carolina.

Losses to people will ripple out through communities

When people don’t have what they need —  health care, food, and income — they can’t care for their families, contribute to their communities as workers and entrepreneurs, or support local economies.  The effects ripple through our communities in ways that hold back our economy from delivering lower costs, better and more jobs, and the well-being that comes from security that a hard time doesn’t become a lifetime of struggle.

While research shows that tax cuts for the wealthy don’t “trickle down,” the dramatic cuts to federal funding for basic needs programs will be felt far beyond the households who see their benefits taken away.

• Rural hospitals — already at risk of closure — rely on Medicaid as an important source of revenue because it reduces uncompensated care rates. Seven rural hospitals that employ nurses, doctors, and support workers are already at high risk of closure, and slashing Medicaid funds could shut them down. Health care facilities poised to re-open like the one in Martin County could also be affected by the cuts, and primary care deserts in the state could grow.
• SNAP has an economic multiplier effect, generating $1.54 in economic activity for every $1 spent in a weak economy. Local grocers and convenience stores in areas with high rates of SNAP participation — including more than 1,400 in North Carolina — rely on SNAP purchases to keep their businesses afloat, pay their employees, and keep prices affordable.
• One in 5 small business owners in North Carolina live in households that rely on SNAP or Medicaid. Without help affording groceries and health care, many entrepreneurs could be forced to close up shop.

Federal funding for programs and services doesn’t just help people — it helps communities stabilize and give local economies room to grow.  The cuts proposed in the US House will be felt throughout the state at businesses, as well as service providers like food banks and churches, who will see increased demand for their support.

State budget writers will be left to sort through the fallout

The damage of the US House plan doesn’t just take away support — it passes the costs to states. North Carolina receives nearly the equivalent of its entire state General Fund budget in federal dollars each year. These funds provide state and local governments with support to administer programs, to build infrastructure that improves access to jobs and opportunity, and to innovate on emerging technologies.

The US House plan proposes to force direct costs onto state leaders for these unpopular cuts, leaving state budget writers with the final decisions about how to make the math work. We should be clear, the cuts outlined in the House federal budget bill — combined with the potential impact of tariffs, federal layoffs, canceled grants, and slowing revenue growth — could push the state toward a funding collapse even as it creates greater hardship for people.

Here are three main ways this plan pushes costs to North Carolina:

• For the first time in history, states will be required to pay for food benefit costs that have always been paid by the federal government. Based on the most recent data, North Carolina would be required to pay $584 million of food benefit costs in 2028, but it could be required to pay more than $730 million at some point. That higher figure could be reached because the share would now be based on state error rates, which vary substantially year-to-year and result when fewer staff and technologies are available to manage caseloads.
• New red tape would increase administrative costs, even as the federal funding to cover those costs is slashed. The proposal requires more frequent recertifications in Medicaid and work reporting requirements in Medicaid and SNAP that will increase the costs of administration.
• Blocks revenue options for states. In Medicaid, provider taxes support the ability of North Carolina to pay its share of health care costs under the program. The House bill would limit the ability of the state to use that source of revenue, leaving the General Fund to make up the difference — likely requiring cuts to other key services or raising taxes and fees elsewhere.

In North Carolina, the math is impossible. State leaders are already faced with projected year-over-year revenue declines due to deep income tax cuts for the wealthy and profitable corporations. The additional federal cost shifts can’t be absorbed by North Carolina without reducing services received, lowering provider payment rates, taking away health care and food assistance from even more people, or cutting funding for child care, housing, public schools or other programs to find the state money.

The right choice: Protect people, pause tax cuts

These aren’t the only choices available to state leaders — and they’re not the right one.

Instead of forcing harmful tradeoffs, NC lawmakers should pause the scheduled income tax cuts and commit to a plan to protect our people and communities from these losses.  By doing so, our state can send a clear message: We will not sacrifice food, care, and community well-being just to hand more tax breaks to the top 1 percent.