The Future of North Carolina’s Healthy Opportunities Pilots and What it Means for Other Medicaid Programs Considering Social Needs Programs 

North Carolina’s much-heralded Medicaid experiment, which addressed social drivers of health like food, housing, and transportation more broadly and systematically than in other states, is on the brink, a victim of the latest partisan budget standoff in the state. North Carolina’s Department of Health and Human Services halted the Medicaid pilot on July 1 due to funding cuts from the state legislature. The odds that it will be revived when state lawmakers finally do strike a budget deal are shrinking, though not extinguished. 

Savings and Economic Benefits 

The irony is that recent data shows the Healthy Opportunities Pilots (HOP), as the program serving highly vulnerable and chronically ill beneficiaries is known, was bringing down health care spending and reducing emergency care. Those findings still resonate. Not just for North Carolina as it figures out the path ahead, but also for other states trying to address social drivers of health in a political and fiscal landscape that is both changing and challenging. 

The interim evaluation of HOP from the University of North Carolina Cecil G. Sheps Center for Health Services Research and the Duke Margolis Institute for Health Policy showed the program saved an average of $85 per enrollee per month, or $1,020 per beneficiary per year. Participants in the initial three pilot regions in the state were more likely to have needs, particularly food insecurity, addressed. The analysis also found another layer of return on investment: Economic benefits to the surrounding communities, including for small and medium-sized farmers. And it was particularly helpful in rural areas and those affected by Hurricane Helene in September 2024. 

Moreover, savings are likely to be higher in subsequent months, given that the initial time frame studied encompassed the pilot’s early start-up costs, noted Mark McClellan, MD, PhD, director of the Margolis Institute at Duke University, who has tracked North Carolina’s health care transformation closely. 

A Fork in the Road for Medicaid Programs 

Across the country, states are beginning to grapple with how to pack as much punch as possible into their Medicaid dollars as spending is forecast to fall by roughly $1 trillion over the next decade under the tax and spending bill, HR1, that Congress passed, in July. What innovative models might help fill those gaps is likely to be a major focus across the political spectrum when state legislatures next convene.  

It is also a time of uncertainty about how the Centers for Medicare and Medicaid Services (CMS) under Administrator Dr. Mehmet Oz will approach social drivers of health on a national scale. In March, the agency cancelled prior Biden administration policies that made it easier for states to embark on such programs.  

CMS instead promised greater scrutiny and a state-by-state approach. But it’s worth noting that neither CMS, nor the sweeping law approved by Congress over the summer, declared such programs off limits either. 

Against this backdrop, the recent appointment of health tech executive Dan Brillman to head the Center for Medicaid and CHIP Services within CMS might signal openness to addressing social drivers. Brillman is the co-founder and CEO of UniteUs, a tech platform that now has a presence in 45 states, and works with Medicaid in five states including North Carolina, according to a company spokeswoman. (The others are Oregon, New York, Arizona and Missouri.)  Depending on the state, the UniteUs platform connects health and social services, for Medicaid, veterans and other high-needs populations, and has played a role in disaster relief.  

Amid all this uncertainty, the ROI data from HOP, albeit limited, may reverberate, Laura Gottlieb, MD, MPH, founding co-director of UCSF’s Social Interventions Research and Evaluation Network (SIREN) said in an email. She and her co-directors Caroline Fichtenbert, PhD, and Danielle Hessler-Jones, PhD, described the North Carolina findings as the most significant analysis to date of a state program addressing social needs. They noted that the strong data could help other states encountering the coming fork in the road created by federal cutbacks in Medicaid and other social programs. 

“Like many others in the field, at SIREN we can envision two paths moving forward,” she wrote. “In one path, health care systems and states will experience such scarcity and distraction related to medical care and social services access that they will decrease activities related to social care in coming years. That is a real possibility.” 

The alternative scenario is that the Health Opportunities Pilots report, along with promising data from the CMS Innovation Center’s Accountable Health Communities demonstration, will help states and health care systems “appreciate that social care is likely to decrease health care costs and improve health — and perhaps recognize their important roles as providers of last resort when other social services are diminished  —  and therefore redouble efforts to invest in social care programs,” the SIREN experts wrote. 

The FMAP wasn’t changed in HR1. But North Carolina’s trigger is different. It’s tied to any extra state spending whatsoever on the expansion population – and that will occur as the law is implemented because of limits on provider taxes and other new expenses that will fall on states. The future of expansion is a separate policy question from Healthy Opportunities fate – except in the sense that they both require Medicaid dollars and North Carolina will have billions fewer dollars. 

Bipartisan Support in the Balance 

Healthy Opportunities has had bipartisan support from early on. The Medicaid 1115 waiver, which was approved by then-CMS Administrator Seema Verma in the first Trump administration, included both Medicaid managed care — a GOP priority — and the program that became HOP, a Democratic initiative. It was approved under then North Carolina Health and Human Services Secretary Mandy Cohen, who went on to lead the CDC under the Biden administration, and largely implemented under her successor Sec. Kody Kinsley. 

Although the waiver was approved in 2018, it took a few years to get both the Medicaid managed care component and the social determinants pilot launched. The UNC-Duke report on Healthy Opportunities covered a relatively short time period, March 2022 to November 2023, and didn’t reach statistically significant conclusions about health outcomes. Data over a longer period are being analyzed to explore those questions.  

But the findings were robust enough for the research team to endorse the next step. 

“Extending and expanding the Healthy Opportunities Pilots provides an important opportunity for North Carolina to shift Medicaid costs toward prevention while achieving longer-term savings on state health care spending, with better health outcomes and more resilient communities,” the report said.  

The pilot was limited to three regions in the state, covering a third of North Carolina’s 100 counties though not a third of the state population. Neither Charlotte nor the Research Triangle areas were included; pilot areas were more rural, by intention. Fortuitously, as it turned out, one pilot did include Asheville and nearby counties that were hardest hit when Helene struck one year ago.  

Early this summer, at least some of that initial bipartisanship on Medicaid remained despite other big disagreements over state spending. There was still discernible momentum toward renewing the pilot funding — but not quite enough.  

Some key GOP lawmakers openly expressed support for extending Healthy Opportunities at least a few more years, including State Sen. Jim Burgin, the chair of the Senate Health Committee, and House Health Committee member Rep. Timothy Reeder, an emergency physician practicing in a rural part of the state who understands what Medicaid can mean for both patients and providers. 

But that was July. Neither lawmaker responded to follow-up emailed questions about whether they still saw an opening. 

The NC state health department did not comment on the program’s prospects except to confirm the pilot is currently inactive.  

McClellan hasn’t given up; he’s both an economist and a physician and Healthy Opportunities makes sense from both those perspectives. 

He suggested that it may take a while to find a political compromise – but in the meantime there may be some stopgap ways to keep getting services to people.  NC360, the state’s UniteUs platform, is still available. Medicaid managed care plans may decide it’s cost effective to keep getting some services, like food assistance, to certain high-need patients. There may even be ways to find some common ground on healthy food and nutrition with the MAHA movement and policies HHS Sec. Robert F. Kennedy Jr might embrace.  

“I think some version is going to continue,” he said. “The question is: How big and bold is it going to be?”