Public Policy Update - June 24, 2026

Read a summary of recent public policy updates that may be of interest to North Carolinians with intellectual and other developmental disabilities (I/DD).

FEDERAL

Reconciliation

Reconciliation process is what was used to pass HR1 (One Big Beautiful Bill), which included significant Medicaid cuts. Reconciliation is a special legislative tool that can be used by the Senate for mandatory spending and only requires 51 votes instead of 60.

Reconciliation 2.0 passed out of Congress and was signed by the President on June 10, 2026. The bill includes nearly $70 million to fund Immigration and Customs Enforcement (ICE) and Border Patrol through 2029.

Following the 2.0 package, House Republicans and the White House are in discussions for a third reconciliation bill. Reconciliation 3.0 will likely focus on defense spending, entitlement reforms (Medicaid, Medicare, health savings accounts), anti-fraud measures, and SAVE Act (Safeguard American Voter Eligibility Act), which would require Americans to provide documentary proof of U.S. citizenship, such as a passport or birth certificate, to register to vote in federal elections. While this seems to be moving in the House, the Senate does not appear to be eager to take this on.

Budget

The regular budgeting/appropriations process for fiscal year 2027 (October 2026 – September 2027) is continuing. Most activity has been on the House side. All committee markups and approvals have been completed. The Committee that NCCDD follows the closest is Labor, Health and Human Services and Education.

We are relieved to see several specific areas related to intellectual or other developmental disabilities (I/DD) maintain flat funding in this bill:

• Developmental Disabilities State Councils
• Protection & Advocacy (P&A)
• Voting Access for Individuals with Disabilities
• UCEDDs – University Centers for Excellence
• Independent Living Programs
• Assistive Technology Act Programs
• Traumatic Brain Injury (TBI) Programs
• NIDILRR – Disability & Rehabilitation Research

But there are other areas that affect people with disabilities:

• Affordable Care Act (ACA) Marketplace: $1 billion cut (reduce access to health care).
• Department of Labor: $3.7 billion cut includes cuts to re-entry programs (people with disabilities have benefited from these programs) and cuts to the Workforce Innovation and Opportunity Act (WIOA).
• Department of Education: $8.1 billion cut includes cuts to Title 1(support for low-income schools), cuts to Federal Work-Study programs, and cuts to the Office of Civil Rights (protections for students with disabilities).
• Blocks funding for any policies that promote diversity, equity, and inclusion.
• There were some slight increases to IDEA and Head Start, but these come at the expense of other programs like after-school programs and professional development.

The above are proposed budgets from the House committees. All committee appropriations bills have to be passed on the House floor. At this writing, two have passed, and the rest of the twelve await floor votes. They are all expected to pass.

The Senate has not made as much progress on its budget bills. There seems to be a stalemate with no agreement on the top number for the entire budget. It is very unlikely that they will complete markups on their committee appropriations bills by the August recess. Due to election-year legislative calendars and disagreements over top-line numbers, Congress will likely need to pass one or more Continuing Resolutions (CR) to prevent a shutdown when the fiscal year begins in October.

HR 8464: Stopping Fraudulent Payments Act

The House voted to pass H.R. 8464: Stopping Fraudulent Payments Act on June 10, 2026, as part of a broader package of 11 oversight bills aimed at cutting down on government waste and fraudulent federal assistance.

This bill is designed to let federal agencies stop suspicious disbursements (such as Medicare or state-administered federal programs like Medicaid and SNAP) before the money leaves the Treasury, rather than attempting to get it back after the fact. Advocates are concerned because it creates a broad and subjective authority allowing federal agencies or the Secretary of the Treasury to block federal payments to individuals, nonprofit organizations, communities, and states. While the bill suggests this authority is narrowly related to preventing fraud, its language is broad and vague enough for this, or any other, administration to stop, delay, or condition payments for programs or states it disfavors.

The bill is now being transmitted to the Senate, where it must be assigned to a committee, debated, and voted on before it can head to the President's desk to become law.

Work Requirements

North Carolina and other states have been working on implementing the new work requirement from HR1. On June 1, 2026, the Centers for Medicare and Medicaid Services (CMS) released an interim final rule that details how states should manage exemptions for work requirements for adults ages 19-64 created under H.R.1. The rule clarifies who is exempt from these work requirements and what Medicaid beneficiaries would have to do to qualify for an exemption. According to the new rule, in order to prove you are “medically frail”— a definition that is not typically used in the disability community — you have to also show that your condition significantly impairs your ability to meet work requirements.

For 2027, CMS will allow beneficiaries to self-declare that they meet those exemptions. Starting in 2028, people will need to show documentation and proof to keep their benefits, and many people may lose coverage simply because they cannot get a doctor's statement to prove they need the exemption or they make an administrative mistake in submitting their documentation. This rule will mean that more people will lose access to the healthcare that they need due to the heightened administrative burden.

Many states have been preparing for the implementation of H.R.1 by using their own diagnostic codes to identify people who can claim a medically frail exemption. Now, they will have to adopt this new, more restrictive definition of medical frailty, and they are not allowed to add more categories to the list of people who can claim that exemption.

Olmstead

In 1999, the Supreme Court in Olmstead vs LC recognized that people with disabilities have a ‘right to live in the world’ and states have an obligation to provide services in the community that promote integration. This ruling is the foundation of disability rights and so integral to the inclusion of people with I/DD in their communities.

A recent opinion issued by the Department of Justice says that federal law does not explicitly require states to provide community-based care for people with disabilities. The memo asserts that neither Title II of the Americans with Disabilities Act nor Section 504 of the Rehabilitation Act contains a strict "integration mandate" that forces states to serve people in community-based settings instead of institutions. This interpretation goes against current federal integration policy and signals a shift in enforcement regarding the Olmstead mandate.

This opinion is not the same as a court decision; it does not take away the Olmstead ruling or ADA or Section 504. But it is alarming that the federal government may not enforce these laws. The Arc put it this way, “This opinion seeks to undermine one of the strongest protections people with disabilities have from being pushed into institutions when they can and want to live in the community.”

The American Association of People with Disabilities and The Arc of the United States condemned the memo, warning that it encourages states to defund home-based services and push vulnerable individuals into institutional care.

Here is a link to a statement from The Arc: https://thearc.org/blog/doj-opinion-on-olmstead-threatens-the-right-of-people-with-disabilities-to-live-in-the-community/

Department of Education

Over a year ago, President Donald Trump announced that he would move “special needs” programs to HHS as part of a commitment to close the Education Department. We are beginning to see how this may be accomplished. See the article about the Office of Civil Rights and other grants being moved out of the Department of Education.

STATE

Legislative

Addressing the Budget – North Carolina has not had a budget in place this year as the legislature failed to pass a budget during the previous long session. And this is the main objective during this short session – to approve a budget. We heard back in May that Senate President Pro Tempore Phil Berger and House Speaker Destin Hall had come to an agreement on some key issues that will allow the budget process to move forward. The agreements included issues related to taxes and raises for teachers, state employees, and law enforcement officers. Work on the budget has continued since that time.

On June 17th, House Speaker Destin Hall and Senate Leader Phil Berger met to talk about the budget, indicating that they are close to coming to an agreement. Both expressed that they are hopeful that a budget could be passed by the end of June.

Legislative Bills

HB 34 – Strengthen Medicaid Provider Controls

This bill provides DHHS with the authority to deny or terminate Medicaid providers based on certain actions on a provider’s licensing board and clarifies the Department’s authority to deny or terminate Medicaid providers because of criminal convictions and other activity. This bill also requires that health plans have closed networks for Research-Based Behavioral Health Treatment (RB-BHT), peer support, and community support teams.

The intent of this bill is to ensure quality providers of Medicaid services in the state. There has been considerable concern and feedback from provider organizations about the vagueness of certain provisions and the scope of others. Meetings between provider representatives and legislators have led to some adjustments to language and clarification of some sections. The bill has passed the House and is awaiting passage in the Senate.