A Closer Look at North Carolina’s Implementation of the 2025 Reconciliation Law Medicaid Provisions and Other Changes Amid Medicaid Budget Shortfalls Authors: Jada Raphael, Amaya Diana, and Anna Mudumala Published: May 29, 2026

https://www.kff.org/medicaid/a-closer-look-at-north-carolinas-implementation-of-the-2025-reconciliation-law-medicaid-provisions-and-other-changes-amid-medicaid-budget-shortfalls/ On April 30, 2026, North Carolina Governor Josh Stein signed legislation that includes Medicaid policy changes and closes an estimated $319 million shortfall in funding for the state’s Medicaid program for FY 2026. Many of the legislation’s Medicaid policy changes are related to implementation of the 2025 federal reconciliation law. The 2025 reconciliation law requires states to condition Medicaid eligibility for adults in the Affordable Care Act (ACA) Medicaid expansion group and enrollees in partial expansion waiver programs (Georgia and Wisconsin) on meeting work requirements starting January 1, 2027. The 2025 reconciliation law also limits states’ ability to raise the state share of Medicaid spending through provider taxes, restricts state-directed payments (SDPs) to hospitals, nursing facilities, and other providers, and increases barriers to enrolling in and renewing Medicaid coverage. As states are preparing to implement the reconciliation law provisions, many states are facing more tenuous budget situations with slowing revenue growth and broader reductions in federal funding.