October 25, 2025
Opinion: Push Reset Button On State Budget
By John Hood
RALEIGH — North Carolina is in a mess. It was an entirely predictable mess. Indeed, I and others have been predicting it for more than two years. But former Gov. Roy Cooper, coming soon to a U.S. Senate race near you, and lawmakers of both parties didn’t listen. They expanded Medicaid to include hundreds of thousands of childless, able-bodied North Carolinians — without a realistic means of paying the bill.
That is, they claimed taxpayers wouldn’t have to fund any of the multi-billion-dollar cost of North Carolina’s Medicaid expansion because, get this, the federal government would cover it, either directly through appropriations or indirectly by reimbursing “state taxes” on health providers.
Yeah, I know. The federal government has billions of spare dollars sitting around? An entity running annual deficits counted in 12 digits? The jokes essentially write themselves.
There’s nothing funny about the resulting mess, however. As Carolina Journal and other news outlets are reporting, the congressional enactment of a reconciliation bill that caps provider taxes and imposes work requirements on some Medicaid recipients will rip a big hole in the state’s finances. Projections differ, but the annual fiscal impact will likely begin in the hundreds of millions of dollars and then, as the various federal provisions kick in, grow into the billions.
While I believe the General Assembly was imprudent back in 2023 when it gave in to Cooper’s incessant pleading for Medicaid expansion, legislative leaders did insist on a failsafe. If the (on-paper) state share of the cost of serving the new enrollees exceeds 10%, Medicaid expansion automatically disappears.
Everyone now agrees that when fully implemented over the next three years, the federal legislation’s Medicaid reforms will trip the failsafe. Not everyone agrees on what should happen next. Cooper and his successor, Gov. Josh Stein, oppose any rollback of Medicaid expansion. Some conservative lawmakers support a complete rollback. Other lawmakers of both parties appear determined to keep at least some of the expansion population in the program, either by squeezing Medicaid itself for savings or finding resources elsewhere — cuts in other state spending, for example, or delaying currently scheduled tax reductions.
None of these options will be pleasant. That’s what makes the situation such a mess.
I have never been opposed to funding a medical safety net for poor people or those with significant physical or mental afflictions. What I opposed, what fiscal conservatives across the country have opposed for decades, is a fiscally reckless strategy of layering new public expenditures on top of America’s existing structure of direct subsidies, tax expenditures, and government-imposed transfers.
Contrary to popular belief, our country already devotes more public resources to health care than nearly every other country on the planet. Alas, much of the largesse is misdirected to people who are neither poor nor chronically ill, including middle-income households consuming low-priority services and upper-income professionals getting paid for those services.
Medicare in its current form is unaffordable at anything lower than ruinous tax rates. That’s also true for Medicaid in its current form, and for the various exclusions from income, payroll, and sales tax of private expenditures on health insurance and medical expenses (which reduce federal revenues alone by around $300 billion a year).
Stein and the North Carolina legislature can’t do anything about Medicare, the federal tax code, or the basic structure of Medicaid. That work must be performed in Washington. What state leaders can do — and what they are now compelled to do by state law — is close the projected hole in the state budget.
Although many were frustrated that the North Carolina Senate and House failed to strike a budget deal before the start of the 2025-26 fiscal year, this may turn out to be a blessing in disguise. Lawmakers should take the opportunity to push the reset button, looking at updated projections of revenues and expenditures over the next three years and making the necessary changes — including to Medicaid eligibility, services, and reimbursements — to bring them into line.
John Hood is a John Locke Foundation board member. His books Mountain Folk, Forest Folk, and Water Folk combine epic fantasy with American history (FolkloreCycle.com).
Discover more from JoCo Report
Subscribe to get the latest posts sent to your email.
3 Comments
Comments are closed.
John Hood’s column isn’t just about Medicaid, it’s the first coordinated attack on former Governor Roy Cooper, the presumptive Democratic nominee for U.S. Senate in North Carolina’s 2026 midterm elections. Hood claims that Cooper and a bipartisan legislature plunged the state into fiscal chaos by expanding Medicaid. But the real story, the one Hood deliberately omits, is that any looming budget shortfall is not the fault of Roy Cooper or the expansion itself. It is the direct result of Republican-engineered sabotage at the federal level, rooted in Donald Trump’s Project 2025 agenda. This isn’t Cooper’s fault. It’s the fault of Trump and MAGA Republicans.
Hood’s argument rests on two flimsy claims: that North Carolina enrolled “hundreds of thousands of childless, able-bodied adults” without a plan to pay for it, and that federal legislation will soon cap provider taxes and impose work requirements, thereby dismantling the state’s funding model. What he fails to say is that more than 600,000 North Carolinians have gained coverage, many of them working low-wage jobs, caregiving for family, or living in medically vulnerable situations. These are not freeloaders. They are people doing the best they can in an economy tilted against them. And again, this situation isn’t Cooper’s fault. It’s the fault of Trump and MAGA Republicans.
And while Hood complains about the costs of expanding Medicaid to low-income adults, he says nothing about the economic conditions that make healthcare unaffordable in the first place. North Carolina’s minimum wage has been stuck at $7.25 an hour since 2009, unchanged for over 15 years, despite rising inflation, housing costs, and food prices. At $7.25 an hour, a full-time worker earns just $15,080 per year before taxes, well below the poverty line for a single parent, let alone a family. Hood might argue that “most businesses already pay more than $7.25,” but that misses the point entirely. Even $10 or $11 an hour still traps people in poverty. Without Medicaid, many of these workers simply wouldn’t have access to basic care. This isn’t Cooper’s fault. It’s the fault of Trump-aligned Republicans who have blocked every effort to raise wages, protect workers, or expand economic security.
Meanwhile, corporate profits in North Carolina and across the U.S. have reached record highs even during the pandemic. CEOs and large employers benefit from low wages, tax breaks, and publicly funded healthcare, the very system Hood attacks. It’s the height of hypocrisy to claim the state “can’t afford” to insure its lowest earners while billion-dollar companies pay poverty wages and avoid contributing their fair share. Once again, this isn’t Cooper’s fault. It’s the fault of Trump and MAGA Republicans, whose policies protect corporate donors while punishing working people.
Hood vaguely references a federal “reconciliation bill” that might cap provider taxes and enforce new work requirements, thereby triggering a budgetary failsafe. But he never names the bill. He never cites a source. He never mentions who’s behind it. That’s not an oversight, it’s a calculated omission. The Medicaid caps and work requirements he hints at are pulled straight from the Project 2025 agenda, a sweeping plan pushed by Trump loyalists and the Heritage Foundation to dismantle public healthcare programs across the country. And it didn’t stop there. The so-called “Big Beautiful Bill”, passed by a MAGA-led Congress and celebrated by Trump himself, imposed exactly the kinds of provisions now threatening North Carolina’s Medicaid stability. That legislation, not anything Roy Cooper did, is what triggered the crisis John Hood is now trying to pin on Democrats. This isn’t Cooper’s fault. It’s the fault of Trump and MAGA Republicans who designed this trap and now want to exploit the fallout.
Hood offers no real fiscal breakdown, no analysis of the billions in federal funding North Carolina receives through expansion, no mention of long-term cost savings from better public health outcomes, fewer ER visits, or stronger rural hospitals. He doesn’t mention that Medicaid expansion passed with Republican support in the legislature. Instead, he pushes a fear-based narrative designed to confuse voters and attack Cooper as he launches his U.S. Senate campaign. But let’s call this what it is: the first shot in a coordinated attempt to redefine Medicaid as a failure and destroy one of the most successful expansions of healthcare access in state history. And that effort, too, is not being led by Cooper, it’s being led by Trump and the MAGA Republicans now positioning themselves to strip healthcare away from working families.
His language also carries a familiar, coded subtext. When Hood refers to “able-bodied adults” and dismisses entire swaths of low-income people as a financial burden, he is invoking a long American tradition of framing poor and working-class individuals, especially people of color, as undeserving. This kind of rhetoric feeds on resentment and dehumanization. It blames the vulnerable for problems created by the powerful. But let’s be clear: the people who rely on Medicaid are not the cause of our budget problems, they are the ones paying the price for them. And this, too, is not Cooper’s fault. It’s the fault of Trump and MAGA Republicans who have mastered the politics of cruelty and division.
And make no mistake, when Medicaid is rolled back, the consequences will be catastrophic, especially for rural North Carolina. Many rural hospitals already operate on razor-thin margins and depend heavily on Medicaid reimbursements. Removing that funding will force closures, leave entire regions without access to emergency or specialist care, and destroy healthcare jobs. Then, in the vacuum, large corporations will move in, buy up distressed hospitals, consolidate services, and raise the cost of care, turning community health into a profit engine. This is how America is being reshaped: not by accident, but by design. Into a place where only the wealthy can access basic services, and where red states won’t realize what’s been done to them until it’s too late.
He even has the audacity to call the rollback a “reset.” That’s not a reset—it’s a disaster. Stripping healthcare from over half a million North Carolinians is not a fiscal tweak. It’s a human and economic catastrophe. It’s also a political one—crafted by Trump’s advisors, empowered by MAGA-aligned lawmakers, and now being echoed by John Hood. This isn’t Cooper’s doing. It’s the natural outcome of a Republican strategy that prioritizes tax cuts for the wealthy over basic dignity for working people.
Because the truth is, it’s not low-income workers or Medicaid enrollees straining the system — it’s elites like Trump and his donor class who pay little to no taxes, hoard wealth, and dodge responsibility at every turn. This is a back-scratch in motion — a favor to the ultra-rich, waiting to be repaid in campaign cash, media loyalty, and political insulation. The rest of us — the sick, the poor, the underpaid — are being used as bargaining chips. And all the while, the rules are not the same. There is one set of rules for the powerful and another for everyone else. This system is rigged — not by the people receiving care, but by those determined to take it away. This isn’t fiscal responsibility. It’s class warfare. And it didn’t come from Cooper. It came straight from Trump.
BULL
Too Long; Didn’t Read