As expected, Governor Cooper has included funding for Medicaid Expansion in his newly proposed recommended budget. FY 2019 would require a total of $2.1 billion in funding while the number almost doubles in FY 2020 totaling nearly $4.2 billion.

90% of Medicaid expansion costs are paid for by the federal government which is expected to run a $900 billion deficit this year. There is good reason to believe this generous matching rate used to entice states to expand their Medicaid program under the Affordable Care Act will be reduced in the future.

10% is paid for by the state. The governor has proposed a tax on hospitals and health plans. Hospitals would pay roughly $500 million in new taxes over the first two years to fund the state share. Hospitals have welcomed the tax, which is odd because it occurs at the same time they seem to fear reduced revenues from the SHP due to the Treasurer’s proposed plan.