More than one in four new parents has had to quit their job, against their will, because they were unable to find affordable or available childcare, North Carolina officials said Tuesday during a legislative committee meeting. That’s costing businesses billions of dollars in lost productivity. It’s also hurting some couples’ personal financial standing, trading two salaries for one.
Child care was just one of a series of health care and child care issues debated by lawmakers Tuesday — services that have been driving up costs for individuals and the state government, and causing headaches for business owners.
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A rise in Medicaid costs — especially a recent spike in state spending on autism therapies — also has lawmakers’ attention as they prepare to return for the 2026 session, which is expected to begin in April.
Gov. Josh Stein, a Democrat, has called on state lawmakers to fully fund Medicaid. But they’ve so far been unable to reach a deal, even though Republican leaders in the House and Senate agree the program needs more money.
If the program runs out of money, the 3 million North Carolinians on Medicaid could lose their ability to access health coverage.
Medicaid’s fate is in limbo due the legislature’s failure to pass a new state budget last year, but now, some GOP politicians are now pointing the finger back at the Stein administration, questioning whether the state is doing enough to catch or stop Medicaid fraud and control costs.
One particular concern is autism therapy. Combined state and federal spending on the topic through Medicaid was $121 million in 2022, $544 million last year, and is expected to hit $1.1 billion by 2027. The large majority of patients are children.
Sen. Benton Sawrey, R-Johnston, said the state should absolutely be helping children with autism. But he also said fraud investigations involving Medicaid payments for autism therapy have also more than doubled in just the last year — raising concerns of whether the state is doing enough to crack down on potential fraud before it occurs, and is billed to taxpayers.
“I was deeply concerned when they told me there’s a 127% increase in referrals to the special investigative unit at DHHS just over the past year,” Sawrey said Tuesday.
Sen. Ralph Hise, R-Mitchell questioned whether some of the telehealth sessions being billed to the state are happening at all. NCDHHS Secretary Dev Sangvai said they have no evidence or allegations of fake sessions being billed to the state. But there are other concerns his office has been looking into, he said.
“We have no reason to believe that services aren’t being provided in the manner in which they’re being provided,” Sangvai said. “I think our questions are largely around scope, duration and use of services.”
Rep. Larry Potts, R-Davidson, said those are his concerns — namely, that providers are billing for many hours of therapy, even for very young children who might not benefit from lengthy sessions.
“We are talking about children with autism,” Potts said. “How do you do telehealth for 1 hour and 30 minutes — and keep 1-to-5 year olds’ attention — and have any kind of hope that anybody understands what’s being said?”
Bigger fight over Medicaid spending
The questions around the state’s spike in autism spending comes as Gov. Josh Stein is pressing lawmakers to pay another $319 million this spring into Medicaid. The program, which provides health care for 3 million North Carolinians, is facing a shortfall due to rising costs and the lack of a new state budget.
If it runs out of money, which Stein’s administration says could happen within months, those millions of patients could find themselves unable to get coverage for health care.
Republican lawmakers, who control the General Assembly, acknowledge Medicaid is underfunded, but they have repeatedly rebuked Stein’s requests that they act to fully fund the program. Stein called a special session of the legislature late last year to address Medicaid funding, which Republicans ignored and didn’t attend.
And on Monday the governor again called on the legislature to address Medicaid funding when they return to their regularly scheduled session in April. He was met with frosty responses from Senate leader Phil Berger, R-Rockingham, and House Speaker Destin Hall, R-Caldwell, who suggested the program isn’t as frugal as it could be, nor is it guarding against fraud as well as it could.
On Tuesday the state’s interim deputy secretary for Medicaid, Melanie Bush, sought to assuage lawmakers’ concerns about waste, fraud or abuse in the system. She outlined various financial pressures the program is facing — including a $124 million cut from the federal government — as well as detailing $48 million in savings that she said DHHS has found through Medicaid billing reviews.
“We are looking to pick up every penny we can, where we can,” Bush said.
Child care shortages
According to a separate child care-focused presentation before one of the oversight committees that met Tuesday, the lack of available and affordable child care isn’t only forcing some new parents to quit their jobs.
There are also many more cases in which new parents have turned down promotions or delayed moving into newer and more lucrative careers.
Frustrations are rising not just among parents but among the broader business community, a top state official on child care issues told lawmakers Tuesday.
“Affordable, quality childcare supports working families and parents to be able to go to work — which allows businesses to recruit work, retain talent, and helps to keep North Carolina’s future workforce developing skills and success for school and for life,” said Candace Witherspoon, who leads early childhood programming for the state Department of Health and Human Services.
The legislature has previously debated some potential solutions for the state’s child care shortage, although action has been limited.
There’s been debate around building child care facilities on-site at state universities or other large government office buildings to help recruit and retain state employees, but that hasn’t happened yet. Expanding subsidies for low-income families also isn’t a popular topic among Republican politicians who control the state legislature. Witherspoon said Tuesday that the state only pays enough to cover 18% of the children who qualify for subsidies. More than 15,000 children were on the waitlist to receive subsidies as of late 2025, she said.
There are competing forces driving problems in child care, she told lawmakers. Costs have risen substantially: It now costs families more than $11,000 a year to enroll a child in child care in North Carolina. But at the same time, child care companies aren’t able to easily raise wages for workers. The average child care worker makes about $14.20 an hour, leading to staffing shortages that make waitlists longer.
And therein lies the riddle: Pay bumps would likely require operators to raise rates for parents. But rate increases might cause more parents to stay at home with their kids. But if operators don’t raise rates, they risk losing workers to other employers who pay more. And if they lose employees, they’ll have empty classrooms due to lack of staff, and may need to shut down entirely.
Hise said it can be difficult to convince local community colleges to invest in the staff and space necessary to teach the courses child care workers need to be certified for their jobs. There’s a concern people won’t be interested in that training and career, he said, since they “can make more money in fast food.”