Healthcare providers brace for Medicaid cuts. Are layoffs in rural NC next?

Major shakeups in healthcare are coming to North Carolina next year, including changes to federal law that could kick as many as a quarter-million North Carolinians off Medicaid, the program that insures low-income people, disabled people, children and others.

Losing access to healthcare would threaten more than just those individual people. The cuts have the potential to devastate local economies — particularly in rural areas, where larger portions of the population are on Medicaid — if hospitals and health clinics respond by conducting layoffs, or shutting down entirely.

“We’re all talking about it,” said Michelle Skipper, a nurse who runs a primary care practice in Scotland County, southwest of Fayetteville, where doctors are few and far between. “Rural health gets disproportionately affected by cuts to Medicaid. And then especially those of us that try to have some independent practice … it makes it much more difficult to stay open.”

In a worst-case scenario the Medicaid cuts could cause as many as 30,000 layoffs in North Carolina, according to the Commonwealth Fund, a group that promotes healthcare access. Its analysis predicted layoffs in the state’s healthcare industry, but also in other fields as an indirect result of the health layoffs — after doctors, nurses and others are forced to leave town or reduce their spending habits.

In many parts of the state, hospitals are not only some of the largest employers but also among the best-paying.

“The affected businesses are forced to respond by reducing staffing, salaries, or purchases of other goods and services,” the report said. “As employees lose their jobs or income, they must reduce their spending on consumer goods and services, like food, housing and transportation.”

It’s an issue the state’s top economic developer is paying attention to. Commerce Secretary Lee Lilley, whose office focuses in part on recruiting new businesses to North Carolina, has seen how previous hospital closures have hurt the state’s ability to attract new jobs to rural areas.

“It's really hard for us to recruit a business or help a business to grow in a community that does not have access to health care,” Lilley said in an interview with WRAL, adding: “When [prospective companies] ask the question, ‘Well, can my folks go to the doctor here?’ [and] the answer is ‘No’  … it has huge knock-on effects for economic development.”

In the past 20 years, a dozen rural hospitals in North Carolina have closed their doors or cut down on services — such as deciding to stop handling child births, or to operate as only as an emergency room.

Several other rural hospitals are considered at risk of shutting down due to the Medicaid cuts. Public Citizen, a politically progressive consumer advocacy group, says more than 400 hospitals nationwide are at risk, including three in North Carolina: the hospitals in Sanford, Lumberton and Marion.

The North Carolina Healthcare Association, a hospital advocacy and lobbying group, told WRAL it’s “deeply concerned” about the Medicaid cuts and what they’ll mean for the state longterm.

“These provisions represent significant reductions in Medicaid resources that rural hospitals rely on to sustain care,” a spokesperson said. “North Carolina’s rural hospitals already operate on very thin margins, where Medicaid payments fall short of the cost of care. Changes to state-directed payments will further widen this gap.”

Democratic Gov. Josh Stein agrees.

"The state is facing billions of dollars in Medicaid funding cuts over the next decade because of [the new law], and those cuts will be devastating for the entire health care system," a Stein spokesperson told WRAL. 

‘Harmful to our entire state’

Skipper worries the cuts could affect small practices such as hers, as well as bigger systems — such as ECU Health, which operates hospitals and clinics throughout eastern North Carolina.

Skipper is also a professor for East Carolina University, where she is director of specialty nurse training programs. Nearly every county in North Carolina has a shortage of nurses and doctors, she said, and cuts in the near future could make that problem worse for years to come. There already aren’t enough providers to give the next generation of nurses real-world training.

“We run a long waiting list of folks who would like to get into our [nursing] programs at ECU,” she said. “But I can't admit more than I can get trained — because I don't have local clinicians who are willing to say, 'Yep, I’ll take a student.’ [Obstetrics] and pediatrics are the worst. Trying to find women's health and pediatric placements for students is a challenge.”

The Medicaid cuts are happening due to Republican President Donald Trump’s signature 2025 legislation, the One Big Beautiful Bill Act. Its tax cuts and ramped-up funding for immigration enforcement were paid for through a combination of sources, including $3.3 trillion in deficit spending and $1 trillion in cuts to Medicaid.

Skipper said she is also worried about a separate piece of the One Big Beautiful Bill that makes it harder for people to get federal student loans to pursue degrees in nursing and other health fields. North Carolina Attorney General Jeff Jackson is also a critic; he and other Democratic attorneys general sued the Trump administration last week to block that policy.

“Something that makes it more expensive to go into healthcare — to become a nurse, to become a physician assistant — is going to be really harmful to our entire state, in particular rural North Carolina,” Jackson said at a press conference.

‘Let’s have a plan’

Sen. Jim Burgin, R-Harnett, a top health policy leader in the state legislature, said he believes it’ll be better long-term for the state and country if fewer people are on Medicaid — but that more needs to be done to make sure they don’t wind up uninsured.

“I've been a proponent of, ‘Let’s have a plan on how to get people off of Medicaid,’” Burgin said in an interview. “And I don't mean kicking them off. I mean getting them prepared to take a job that pays them enough, with a company that provides health insurance, so they don't need Medicaid. And we can do that.”

Burgin has ideas for how to get there. The state could create free tuition for community college and boost child care aid, he said — priorities Democratic Gov. Josh Stein also shares — to help people get the skills and time necessary to move out of low-wage jobs into more stable careers.

And over a year ago, Burgin filed a bill to create a state-run health plan that would let people buy insurance coverage a la carte, but so far it’s gotten no attention from his fellow Republicans in the legislature. A similar program in Virginia insures hundreds of thousands of people there.

Or, Burgin said, since the state already pays incentives to companies that move to North Carolina and create new jobs — why not offer extra incentives for them to hire people off of Medicaid?

There are 255,000 North Carolinians who will need to prove they’re working or else lose Medicaid coverage, starting in about six months. Burgin said some are already working, some are unemployed, and some are under-employed. Whatever the case, he hopes they find better-paying work and get off Medicaid on their own.

“People are happier if they're able to take care of themselves, and not be taken care of by the government,” he said.

Stein’s commerce department also sees expanding access to healthcare as a key goal, particularly in rural areas where people are more reliant on Medicaid.

The state’s new economic development plan, released this month, suggests that while health insurance might be too expensive for some small businesses to give their workers, there’s a solution: Multiple businesses in the same area could team up to buy insurance together for better rates. The report suggests local business groups, such as chambers of commerce, could lead that effort.

The report also recommends the state keep rural healthcare needs in mind when deciding how or where to spend money on everything from high-speed internet expansion to infrastructure projects or workforce development efforts. “Targeted investment in high need regions will help sustain access to care, strengthen rural health capacity, and support the economic stability of communities where hospitals and clinics serve as major employers and service anchors,” the report says.

Rural health funding

North Carolina’s expected economic losses from the Medicaid cuts could measure in the billions of dollars. The federal government has agreed to pay North Carolina a fraction of that amount, $213 million through a program called Rural Health Transformation, to help soften the blow.

Healthcare business leaders will lead the way in deciding how to spend the money, and the state Department of Health and Human Services will oversee the work to ensure the money is spent wisely.

“Together, these organizations will work as regional networks connecting medical, behavioral health, and social supports as North Carolina increases access to care for rural communities across all 100 counties,” a DHHS spokesperson told WRAL.

In Raleigh, state lawmakers have about a month left until they plan to wrap up for the rest of the year. They’ve already done some work on healthcare, including oversight hearings to ensure those rural health funds are on track.

DHHS Secretary Dev Sangvai told lawmakers last month: “Every rural community in North Carolina is different. What works in the mountains is not the same for folks on the coast.” Mental health care, maternity care and primary care were among the topics he listed that could be top priorities.

Until last month, there had been uncertainty around whether the One Big Beautiful Bill Act would eliminate Medicaid Expansion in North Carolina. That program insures 725,000 people who are working for companies that neither provide them with health insurance nor pay them enough to afford private health insurance.

State health officials, however, believe that the legislature fixed those issues and saved Medicaid Expansion, at least temporarily, when it passed a broader Medicaid bill in April that also contained new tax provisions aimed at saving Medicaid Expansion. Stein had previously raised concerns about the loss of Medicaid Expansion, and his spokesperson said the legislature deserves credit for working to address those concerns, adding: "Governor Stein is focused on ensuring North Carolinians can access the care they need for generations to come."

But the new federal law will still require about 255,000 North Carolinians on Medicaid to submit to work requirements. Research from Arkansas, which previously implemented work requirements, concluded that most of the thousands of people who lost Medicaid there actually were working — but ran into “bureaucratic obstacles” with filing their paperwork that made them lose their healthcare anyway.

DHHS told WRAL that it is anticipating “successful implementation of work requirements in North Carolina.”

WRAL state government editor Jack Hagel contributed to this report.