North Carolina’s Medicaid program won’t shift to managed-care benefits as scheduled early next year, the largest casualty to date of the months-long budget stalemate between Democratic Governor Roy Cooper and Republican lawmakers.

Although the Department of Health and Human Services’ Tuesday announcement about the rollout suspension was anticipated, the indefinite delay represents a significant failure for both the legislative and executive branches.

Both sides quickly blamed the other for the postponement, which will waste state dollars when the shift is supposed to save taxpayer money.

Legislators and the Cooper administration hadn’t been able to reach an agreement on final spending and program changes to get services started February 1 for about 1.6 million Medicaid recipients. DHHS Secretary Mandy Cohen had said a deal was needed by mid-November. Legislators adjourned for the year last week.

“We just can’t go ahead and move on in the face of uncertainty,” Cohen told The Associated Press in an interview, adding that no new start date will be set now. “We’ll wait for the legislature to come back in January and see where we go.”

The impasse largely centered around Cooper’s efforts to expand Medicaid to hundreds of thousands of low-income residents through the 2010 federal health care law. Although managed care can happen without expansion, Cooper has attempted to connect the two.

The governor has vetoed two bills containing the necessary managed-care language. One is the larger two-year budget approved by GOP lawmakers that he vetoed in June. The other is a stand-alone measure focused on managed care only that he vetoed in August. Cooper said in his veto message that health care needed to be addressed “comprehensively.”

The GOP-controlled General Assembly began the Medicaid “transformation” process with a 2015 law, and Cooper’s DHHS had been working since he took office to implement these changes. It awarded multibillion-dollar contracts to five health care entities that were planning to serve Medicaid recipients.

Medicaid is moving from a traditional fee-for-service model to one in which four private insurers and a physicians’ partnership will receive fixed monthly payments for every patient seen. Health officials say the changes should lead to improved health outcomes and more fiscal stability for Medicaid, which spends about $4 billion in state tax dollars annually. The federal government pays an additional $12 billion.

Sen. Joyce Krawiec, a Forsyth County Republican, warned in a news release earlier Tuesday that Cooper’s veto of the stand-alone bill “will force insurers to lay off thousands of people they’ve already hired as part of the yearslong plan to transform Medicaid.”

Senate Republicans couldn’t immediately provide backup to substantiate that level of job losses. Cohen wouldn’t comment on specifics about employment except that no DHHS employees will lose their jobs. “She is correct there are consequences to their actions,” Cohen told the AP.

Cohen said DHHS will continue to carry out the fee-for-service plan, and patients will continue to receive health services. The department will alert Medicaid consumers to the delay.

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