State must give counties a break on Medicaid costs

Opinion

April 17, 2007

Anonymous The Daily Southerner Tue Apr 17, 2007, 12:08 PM EDT

It’s past time for North Carolina lawmakers to relieve counties of the burden of paying part of the expense of Medicaid. Medicaid costs saddle counties with an ever-growing expenditure over which they have absolutely no control.

The amount and kind of coverage North Carolina residents receive is mandated by the state, chosen from options made available by the federal government, which pays 60 percent of the cost.

Almost all other states pay the remaining 40 percent. North Carolina, however, pays 85 percent of that amount and requires counties to pay the remaining 15 percent. In fact, North Carolina is the only state that requires counties to share in paying for all Medicaid services.

State figures show that in 2005-06, N.C.’s counties spent almost $426 million on Medicaid. Costs have been rising about 10 percent a year. The counties’ share is expected to be $517 million next year. Edgecombe County’s share this year will be about $5 million.

The increase results from the double-digit growth every year in health care costs and from an increase in the number of people who receive Medicaid. Edgecombe residents receiving Medicaid grew from $2.3 million in 1995-96 to more than 4.7 million in 2005-06. That’s a 104 percent increase in 10 years!

In Edgecombe, Medicaid spending eats up 21 cents of every tax dollar.

Over the last two budget cycles, 62 of North Carolina's 100 counties were forced to rsie property taxes to keep pace with Medicaid increases.

The answer is not to reduce Medicaid coverage for the poor, those permanently disabled and the indigent elderly. Almost 70 percent of those covered are children. Giving them a healthy start in life and helping them develop healthy habits increases the likelihood that they will be productive adults with fewer health care needs in the future. Medicaid also makes it possible for poor, uninsured people to seek care from a doctor before they become acutely sick and end up requiring far more costly care in a hospital emergency room.

Lawmakers recognize the problem counties face but have so far failed to deal with it meaningfully.

Last year, the General Assembly appropriated $27.4 million to cap county costs at the 2005-06 level. But by the end of February, counties had spent nearly $24 million more they had by the end of February 2006, making the amount allocated far from adequate to have the intended purpose.

It’s unlikely that the state could take over the entire amount at one time without either taking a source of revenue from the counties or raising taxes. One option that’s been discussed is taking back half a cent of the sales tax revenue that now goes to counties.

Several lawmakers are trying to find a solution. One option being considered is a 10-year phase out because the state can’t absorb half a billion in Medicaid costs now paid by the counties in “one fell swoop.”

A phase out has many positives. Counties would immediately begin to receive some relief. And, if the state takes on the costs over a period of time, economic growth and the resulting increase in tax revenues could well make it possible to avoid a tradeoff with the counties that would rob them of revenue they need for school construction, social services and other costs.

Whatever alternative is chosen, the General Assembly needs to act this year to relieve counties of a cost that’s sapping their budgets and over which they have no control.

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