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$1.6 billion Medicaid 'signing bonus' to fund mental health, training — and bathrooms at a racetrack

Rep. Donny Lambeth introduces the state budget bill on Thurs., Sept. 21, 2023.
Matt Ramey
Rep. Donny Lambeth introduces the state budget bill on Thurs., Sept. 21, 2023.

With the expansion of Medicaid next month, North Carolina is getting a big check from the federal government. State lawmakers plan to spend more than a billion dollars on mental healthcare, training doctors and nurses — and a few projects that don’t relate to health.

To convince more states to expand the government healthcare program — part of the Affordable Care Act — the federal government added what’s called a “signing bonus” for states that pass Medicaid expansion.

In North Carolina, the incentive helped persuade Republican lawmakers and will bring about $1.6 billion over two years. There are no restrictions on how the money can be spent.

House and Senate leaders initially had different ideas for how to spend it. The House and Gov. Roy Cooper’s administration wanted all the money to go towards mental healthcare, while the Senate had a wider array of healthcare-related projects.

The WUNC Politics Podcast is a free-flowing discussion of what we're hearing in the back hallways of the General Assembly and on the campaign trail across North Carolina.

The final plan was worked out by two Republicans who chair healthcare committees: Sen. Ralph Hise, R-Mitchell, and Rep. Donny Lambeth, R-Forsyth.

"Ralph and I met for weeks off and on with staff trying to figure out how to allocate that money, and what's the best investment of spending that money," Lambeth said.

Both men agreed that because the Medicaid money is a one-time windfall, it shouldn’t go toward ongoing government programs that would need to have other funding sources later, Hise said. Some of it will fund construction of new facilities at universities and community colleges to train health care workers.

"We really wanted to put them into infrastructure-type things that allowed us to continue to provide for the additional 600,000 people that now have coverage," Hise said.

One of the biggest allocations is $76 million for UNC Health to build a new children’s hospital, including a mental health facility. Lambeth said it’s only a fraction of the project’s total cost, some of which will come from private fundraising.

"It's a huge project," he said. "And the intriguing part about it was, it will be the only adolescent children's hospital dedicated to behavioral health in the Southeast."

Hundreds of millions will go toward other mental health needs, including mobile crisis teams and a new registry of available beds to help people locate available treatment options.

Health and Human Services Secretary Kody Kinsley supports the plan. "This budget is a seismic investment," he said. "It's one of the largest investments in mental health that we've seen, perhaps ever."

But not all the projects are related to healthcare. The Medicaid money also will go to build a new auditorium at the private Belmont Abbey College in Gaston County, bathroom upgrades at a racetrack in Rockingham, a children's museum in Chapel Hill, an agriculture building in Henderson County and a new Civil War museum in Fayetteville.

Democrats like Rep. Robert Reives, D-Chatham, have been critical of the budget overall for spending billions through earmarks to specific projects in Republican districts. It's part of a common tactic to get more legislators to vote for the overall budget, and Republicans and moderate Democrats who got projects funded in their districts have been holding events with oversized prop checks in recent weeks to celebrate.

"This money has to be invested in North Carolina," Reives said. "And once it's invested in North Carolina, let the best person win. But it's funny in a group that talks about free market all the time, we do more to fix the outcomes than I've ever seen anywhere."

Lambeth said the non-healthcare projects were added to the list late in the budget process; none of them were in the House or Senate's original plan for the Medicaid bonus funding.

"We were trying to fund as many of them as we could" at the requests of House members, Lambeth said. "And that was pretty much the last source that was available," he added.

Kinsley said he’s OK with lawmakers choosing some projects unrelated to health care.

"This money was intended and designed by the federal government to be incredibly flexible," he said. "It was, ‘What would it take to bring states to the table to get Medicaid expanded?’ And frankly, had every single penny gone to bathrooms (at the racetrack) and it got Medicaid expanded, I'd have been happy about it."

But Kinsley’s hopeful the Medicaid bonus money won’t be the last effort to improve mental health in North Carolina. He wants to see more funding to increase salaries to healthcare workers who staff state-run psychiatric hospitals.

"We've had to close about 300 beds across our state psychiatric hospitals," he said. "And at the same time, we have about 350 people that are boarding in emergency departments, stuck in emergency departments across the state with nowhere to go."

While the budget included $40 million for retention bonuses for the people who staff psychiatric hospitals, Kinsley said bigger salary increases are needed to fill the vacant positions that will allow the facilities to serve more patients.

He added that he'll continue to advocate for that in future budgets. Some additional Medicaid incentive money could be available next year.

Colin Campbell covers politics for WUNC as the station's capitol bureau chief.