NC health department would face ‘dramatic’ cuts under proposed budget

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By Taylor Knopf and Rose Hoban

As the state budget moves toward what looks to be an inevitable veto from Gov. Roy Cooper, state health leaders are raising alarm about some of the budget provisions drafted by Republican state lawmakers. Health and Human Services Sec. Mandy Cohen argues that some of the deep cuts could prevent her department from doing its job.

Cohen has spent a lot of time at the legislative building in Raleigh this week, working the halls and talking to budget writers about her qualms with the budget. She’s also been making media appearances to reiterate her priorities and concerns.

headshot of Cohen with the sign reading "DHHS" behind her
Mandy Cohen in her office on the Dorothea Dix campus. Photo credit: Rose Hoban

Since the legislative work session began in the winter, Cohen has made it clear that her first priority is expanding Medicaid to cover low-income North Carolinians who make too much to qualify for the program but too little to receive subsidies to buy health insurance. She has said it’s the best way to boost rural hospitals, get more people with opioid addiction into treatment, and lower insurance premiums for everyone.

“I want a tool that does that with no state tax dollars,” she told NC Health News. “If there’s another solution out there, great, let’s bring it forward and start to solve real problems.”

Republican leadership has said they would consider holding a special session later this year to talk about Medicaid expansion along with other health care issues. Cohen retorted that’s unnecessary since there is a bill in the House with 22 Republican co-sponsors right now that offers a path to cover thousands who fall into the coverage gap.

“We don’t need a special session. We’re in session. Let’s talk about the live bill,” she said. “It’s not Medicaid expansion. I don’t love it. There are things I don’t like about it, but at least it’s a conversation that we should be having that hasn’t been had.”

Republican lawmakers are beginning to acknowledge that once Cooper vetoes the spending plan, they will need to come back this summer to wrangle over spending. At the center of the tug-of-war will be Medicaid and many other parts of the HHS budget.

Money movement or cuts?

Cohen also sharply criticized the legislature for cutting out $42 million in recurring administrative funds over the coming two years. Additionally, she said that as the budget stands right now, the Medicaid budget is $63 million short.

shows details from the 2019 state budget
Budget items showing where DHHS would lose and gain funding. The number circled in red is a cut in recurring, ongoing funding. The item circled in green shows how that money is replaced with one-time funding.

“It’s dramatic. It’s irresponsible,” she said. “It’s not like we’re trying to manage some really trying times. No one has given me an answer in this building about why are we doing this cut?

“We’re not in a recession. Why are they doing it this year… other than to play games?” Cohen said.

But in the House, budget chair Rep. Donny Lambeth (R-Winston-Salem) took issue Wednesday with Cohen’s characterization of cuts to her agency’s budget during the floor debate on the budget.

“There are no cuts in this budget first year, there’s a lot of movement of money,” he said, audibly frustrated.

He went on to explain that the Medicaid system is about to transform from a fee-for-service system administered by the state to one run by managed care companies and when they make the move, DHHS would need fewer people.

In their defense, budget writers also said that while the budget cut $30 million in recurring dollars this year, they replaced the cut dollar for dollar with one-time money. Another cut of $42 million in annual funds get trimmed out next year, half of that gets replaced with one-time money.

But by Thursday, Lambeth said he’d had multiple conversations with Cohen. He said that at first, he didn’t understand why Cohen was so upset by this change, but he intends to make things right for her department.

“Money is money to me,” he said. “So I haven’t really appreciated the differences between recurring and non-recurring.”

He said he now understands that people who have been in government for a long time view recurring funds as the money to pay staff and one-time money as “how you pay for the other stuff.”

He acknowledged that the transition from fee-for-service to managed care, and subsequently regulating the new system, would require many people with specialized skills. Taking away those recurring dollars that fund their salaries could erode employee morale and create an exodus.

“She’s got a lot on her plate in terms of [Medicaid] reform,” Lambeth said. “I’ve tried to emphasize to my colleagues, that is a big deal. And it takes a lot of team effort. She’s got her plate full, and they need the resources to do that.”

On Thursday morning, to help out the department, Lambeth made moves to change the date for Medicaid’s move to managed care, amending a bill to permit DHHS to push back the start date from Nov. 1 to at least March, 2020 if a final budget gets delayed.

Talk of move chills hiring efforts

Currently, DHHS is housed on the old Dorothea Dix campus in downtown Raleigh, and the city is in the process of converting the former psychiatric hospital grounds into a park. The terms of sale require DHHS to vacate their offices on the campus within the coming decade.

However, Cohen said that in the two and a half years she’s been secretary, no one has ever talked to her about moving DHHS out of Wake County to Granville County. Nonetheless, that move was present when the Senate first revealed its budget in May and remained in the compromise budget voted on this week.

Senate leadership said that moving the Health and Human Services department to Granville would bring desirable state-level jobs to a rural area and help boost the economy.

But Cohen said pushing thousands of workers into a rural county would greatly impact the department’s ability to recruit experts and the way her staff conducts business with other departments.

“We collaborate with commerce, with transportation, with environmental quality, with the General Assembly, where my staff is down here all the time helping the General Assembly understand our complex programs,” Cohen said. “Well, how are we going to do that if we’re two hours away?”

Lambeth and others told NC Health News that the move to Granville was a likely negotiating point, designed to put pressure on DHHS as the budget conversations continue.

Just talk of the move has already affected the department, Cohen said. She is in the process of recruiting for some positions in the Division of Mental Health, Developmental Disabilities and Substances Abuse Services and one of their top recruits called to bow out of the running once the potential move to Granville County became public knowledge.

“We run one of the largest insurance companies in the state, and I have to compete with private insurance companies who can pay private insurance company salaries,” she said.

Cohen said she feels as though moving the department to Granville County is “an unfortunate distraction” that the media is focusing on. Meanwhile, the millions in proposed cuts to her department are enough to decimate staffing for whole divisions of DHHS.

“If this was a long, thought-out, deeply-researched, highly-understood, ‘let’s really find the right place,’ that’d be a different thing,” she said.

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