Officials Seek Solution to Medicaid Budget Woes

Medicaid, a health insurance program for low-income individuals, consumed about $2.2 billion of the state's budget for the 2001-02 fiscal year. With an influx of 71,000 more clients than expected, the program is coming in millions of dollars over budget.

Officials have offered no concrete solutions to the overwhelming problem but continue to examine the program in committees.

The federal government funds close to two-thirds of the N.C. Medicaid program, while state and county governments must cover the remaining amount.

"Medicaid is a big problem all about everywhere," said Sen. William Purcell, D-Anson, chairman of the Senate Health Care Committee. "Everything is on the table right now, and not just one thing, a combination of things."

Gov. Mike Easley is working with the N.C. Department of Health and Human Services and a joint legislative appropriations committee to develop a Medicaid proposal for the 2002-03 fiscal year.

He also attended the winter meeting of the National Governors Association last weekend, where Medicaid was a key issue on the agenda.

Sen. Robert Rucho, R-Mecklenburg, ranking minority member of the Senate Health Care Committee, cited increased benefits packages, lower eligibility requirements and an increase in population as three problems plaguing Medicaid in the state.

"This program is outpacing normal government growth," he said. "In essence, it's doubling every four to five years."

Nina Yeager, director of the division of medical assistance in the health and human services department, said Medicaid spending is projected to be about $250 million over budget for the next fiscal year.

She said the department is looking into many options to alleviate the burden Medicaid is creating but added that the governor's leadership has been invaluable.

"The governor will try to cover this shortfall, and we are grateful for that," Yeager said. "We don't want to have to cut services to people who need care."

Officials have examined several options to rectify the situation. An increase in client co-payments is being discussed, but the current rate is already the maximum the federal government will allow.

Rucho also called for propriety in dealing with the drug companies that are involved with Medicaid.

"Currently the federal government gets rebates in exchange for giving the company the ability to have their drugs on the formulary," he said. "But we have to make good decisions without hurting our good corporate citizens like Glaxo Wellcome."

But Rucho said the state government must find a way to permanently alleviate the funding problems caused by the Medicaid program. "We don't just need a Band-Aid," he said. "This is not a Democratic or Republican problem -- it could bankrupt the state."

Allen Gambill, assistant director of financial operations for the N.C. Division of Medical Assistance, said there are basically three options for the state to examine: how much the state pays, who gets coverage and what medical problems get coverage. Gambill also emphasized that especially during tough economic times, there are few solutions to the Medicaid problem.

"(Medicaid's) business is up, but everyone else's is down," he said. "There is no cookbook for this. If someone has an idea, I'd wish they let me know. I'd rather have a root canal than do what I'm doing."

The State & National Editor can be reached at stntdesk@unc.edu.