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Medicaid reality check 

If there is one constant in the legislative halls these days, particularly on the Senate side of the building, it is the belief that Medicaid is a huge problem. Lawmakers complain that it is growing too fast and eats up too much of the state's General Fund budget.

Medicaid is also a major sticking point in budget negotiations between House and Senate budget leaders. The Senate insists on ending the county share of Medicaid costs with a scheme for the state to receive some local sales tax revenue and let counties then raise the regressive sales tax locally to make up the difference. (The Senate also insists on cutting taxes for millionaires.)

One columnist recently referred to Medicaid as a "crushing burden" on counties. Senate leaders continue to defend their decision two years ago to kick 65,000 people who are aged, blind or disabled off the Medicaid rolls as a prudent way to get control of rising Medicaid costs.

Everyone needs to take a breath and consider a reality check on the state's Medicaid program. First of all, it is a success story, not a burden or a budget buster to complain about.

Medicaid provides vital services to 1.6 million people, most of them among the state's most vulnerable—children, the aged, and people with disabilities. It provides the services with much lower administrative costs than the private health care market provides. The cost of Medicaid is growing because health care costs overall are increasing, though Medicaid is growing at a slower rate than private health care plans.

Talk of cutting Medicaid is common in the General Assembly until the specifics of the cuts are discussed. Sixty-nine percent of the state Medicaid budget pays for care for the blind, aged and disabled, who make up 29 percent of Medicaid recipients.

The House budget proposes ending coverage of prosthetics, considered an "optional" service under federal law, but not too optional for people who have lost a limb. That proposal caught the attention of senators on the human services subcommittee.

The recent clamoring to end the county share of Medicaid costs has only increased the Medicaid bashing. But that proposal needs more thoughtful consideration, too. It is true that North Carolina is the only state that requires counties to pay a fixed percentage of Medicaid costs, a program that counties have no control over.

It is also true that the rising cost of Medicaid presents huge problems for poor counties with a high percentage of their residents eligible for the program. Nine counties spend more than 10 percent of their annual budget on Medicaid, led by Bertie County, where Medicaid is 14.2 percent of the budget.

It probably makes sense in the long run to have the state take over the full cost of Medicaid and free up local dollars for local needs like school construction. But it's not that simple.

For example, counties have the obligation to build schools, but the state helps them with statewide bond issues and dedicating money from the state corporate income tax for school construction.

The relationship between state and local governments is complicated and ought to be studied and debated in public, not whispered about as part of final budget negotiations, or addressed with regressive tax schemes. The high-powered fiscal modernization commission is supposedly tackling the topic and ought to be given time to work.

Not every county needs help with Medicaid this year. There are 24 counties where Medicaid takes less than 5 percent of the budget, seven counties where it is less than 3 percent. That doesn't mean those counties wouldn't be better off if the state paid the full cost of Medicaid; it means they aren't struggling for immediate help.

It all points to some version of the House plan this session. The House budget includes $100 million to offset the $500 million county Medicaid tab, with half the money going to counties based on their proportion of Medicaid expenses and the rest targeted to counties with a high percentage of Medicaid recipients.

If budget negotiators want to quibble about the proposal, they ought to consider targeting more than half the money to poor counties. But enough with the regressive tax schemes and Medicaid bashing.

Chris Fitzsimon is director of N.C. Policy Watch. This is from Fitzsimon File, his daily e-mail column. To sign up, go to www.ncpolicywatch.com.

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