Introduction: A Mother’s Struggle
For nearly 18 years, Alessandra Fabrello has navigated an exhausting reality that few can comprehend. As both mother and full-time medical caregiver to her son, Ysadore Maklakoff, she embodies the critical role families play in America’s healthcare system.
“It is almost impossible to explain what it takes to keep a child alive who should be dead,” said Fabrello, whose son developed acute necrotizing encephalopathy—a rare and devastating brain condition—at just 9 months old.
Through North Carolina’s Medicaid program, Maklakoff qualifies for comprehensive medical care in their Chapel Hill home. However, Fabrello has learned to perform procedures typically reserved for doctors, skilled nurses, and specialized therapists because finding qualified providers who accept Medicaid has become increasingly difficult. Now, sweeping cuts to Medicaid provider payments threaten to make an already dire situation catastrophic.
North Carolina’s Medicaid Cuts Explained
Medicaid, the government health insurance program serving low-income individuals and people with disabilities, faces unprecedented financial pressure nationwide. As states scramble to close budget shortfalls, they’re targeting Medicaid—typically one of their largest expenditures—even before President Donald Trump’s comprehensive tax-and-spending legislation reduces federal Medicaid funding by approximately $1 trillion over the next decade.
Impact on Providers and Payments
On October 1st, North Carolina’s Medicaid agency implemented a minimum 3% reduction in payments to all providers treating Medicaid patients. The cuts vary significantly by specialty:
- Primary care physicians: 8% reduction
- Specialty doctors: 10% decrease
- All other providers: Minimum 3% cut
According to the North Carolina Department of Health and Human Services, these reductions affect the state’s entire Medicaid provider network, which serves over 3 million enrolled residents.
Shannon Dowler, former chief medical officer for North Carolina Medicaid, warns that reduced payments will shrink the state’s provider network, resulting in “an immediate loss of access to care, worse outcomes, and cause higher downstream costs.” She emphasizes these cuts aren’t directly related to the new federal law.
“This is like the layers of the onion,” Dowler explained. “We are hurting ourselves in North Carolina way ahead of the game, way before we need to do this.” The state is projected to lose approximately $23 billion in federal Medicaid dollars over the next decade.
Real Stories: Families Facing Healthcare Loss
For families like Fabrello’s, these percentage cuts translate into life-altering consequences. Her son’s dentist has already notified them that the office will stop accepting Medicaid patients in November. Dental care will join the growing list of services her son qualifies for but cannot access due to provider shortages.
Even before the cuts, accessing care was challenging. Occupational therapy, speech therapy, nursing care, and respite care are all difficult or impossible to secure. In an exceptional week, Maklakoff receives just 50 hours of skilled nursing care—less than half of the 112 hours he qualifies for.
“When you say, ‘We’re just cutting provider rates,’ you’re actually cutting access for him for all his needs,” Fabrello emphasized.
The state legislature’s deadlocked budget negotiations resulted in a July mini-budget that allocated $319 million less than the Medicaid agency requested. While lawmakers could reinstate funding during the current fiscal year, Dowler remains cautiously optimistic: “We all hope it changes. If it doesn’t, you’re going to see practices dropping coverage of Medicaid members.”
Understanding the Financial Pressure
Since at least 2019, North Carolina’s Medicaid agency has consistently requested more funding than the state legislature provided. Federal resources, including COVID-19 pandemic relief funds, previously bridged these gaps. However, with those emergency funds exhausted, the agency faced a stark choice: eliminate optional program components or implement across-the-board provider payment reductions. The state chose predominantly the latter approach.
“It’s a difficult moment for North Carolina,” said Jay Ludlam, deputy secretary for North Carolina Medicaid. The budget cut represents “absolutely the opposite direction of where we really want to go, need to go, have been headed as a state.”
Anita Case, who leads Western North Carolina Community Health Services’ three clinics serving approximately 15,000 patients in the Asheville area—including many non-English-speaking tourism workers—described the cuts as making it harder to care for “the most vulnerable in our community.” She’s now examining staffing, services, and contracts to identify potential cost reductions.
Idaho’s Response to Budget Shortfalls
Idaho, with approximately 350,000 Medicaid enrollees, implemented a 4% across-the-board cut to Medicaid payment rates this month, responding to an $80 million state budget shortfall. The state’s Department of Health and Welfare forecasted 19% growth in Medicaid spending this year, forcing difficult decisions.
Hospital Closures on the Horizon
The broad reductions have sparked significant backlash from nursing home operators and patient advocacy groups. Leaders from one nursing home company wrote in an Idaho Statesman op-ed that 75 to 100% of their facilities’ funding comes from Medicaid, and the cuts will force them to “reduce staff or accept fewer residents.”
Toni Lawson, chief advocacy officer for the Idaho Hospital Association, identified approximately two dozen small hospitals—those with 25 or fewer beds—as facing the greatest financial strain. One hospital leader reported having less than two days of cash reserves for payroll, while others reported 30 days or less.
“Hopefully, none of them will close,” Lawson said, though she expects labor and delivery and behavioral health units—which often operate at a loss—to close first due to the payment reductions. Several hospitals in predominantly rural areas already shuttered their labor and delivery units last year.
National Medicaid Budget Challenges
Federal Funding Reductions
Beyond North Carolina and Idaho, states nationwide are implementing Medicaid cuts. Michigan and Pennsylvania continue budget debates where Medicaid spending remains contentious. Washington state approved program cuts that won’t affect eligibility, according to Hayden Mackley, spokesperson for the state’s Office of Financial Management.
State Budget Priorities
Medicaid comprises an average 19% of state general fund spending nationally—second only to K-12 education—according to Brian Sigritz, director of state fiscal studies for the National Association of State Budget Officers.
States experienced robust revenue growth in 2021 and 2022, fueled by economic expansion and federal stimulus aid. However, revenue growth has since decelerated, and numerous states have reduced income and property taxes. Simultaneously, spending on Medicaid, housing, education, and disaster response has increased, creating budget tensions.
The Future of Medicaid Access
For Alessandra Fabrello, the financial implications extend beyond her son’s care access. Unable to work outside caregiving responsibilities, she exhausted nearly all savings before North Carolina began compensating parents for caregiving duties approximately one year ago. This income prevented her from losing her home.
Now, with state payment reductions, she faces a personal salary cut while continuing to provide round-the-clock medical care.
“As parents, we are indispensable lifelines to our children, and we are struggling to fight for our own survival on top of it,” Fabrello said.
Conclusion
The Medicaid cuts in North Carolina, Idaho, and other states reveal a troubling trend: vulnerable populations bearing the burden of state budget shortfalls. As provider payments decrease, access to essential healthcare services deteriorates, potentially creating higher costs through emergency care and worsening health outcomes. Families like the Fabrellos face impossible choices, and healthcare providers struggle to maintain operations while serving those most in need.
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