State could replicate shift in N.Y. Medicaid

North Carolina and New York are the only two states that force counties to pay a fixed percentage of all state Medicaid costs.

This year, North Carolina counties had to allot a total of $440 million for Medicaid costs in their budgets — an increase of 67 percent from 2000.

New York counties, which have seen their Medicaid costs double in the last seven years, also have been hurt.

But New York eased the burden by approving a budget April 19 that will cap the growth of county Medicaid costs at 3.5 percent for 2006.

By 2008, this figure will be reduced to 3 percent, and the state government will begin paying the full administrative costs of the program after 2008.

“It was critically important for counties to have the ability to rein in the local share of Medicaid so they can cap the growth and not have to raise taxes,” said Mark LaVigne, spokesman for the New York Association of Counties.

North Carolina now is considering whether to follow suit.

Several proposals have been brought before the N.C. General Assembly, including a recommendation by the bipartisan Blue Ribbon Medicaid Commission to cap spending at 2004-05 levels and to phase out county spending on Medicaid during the next five years.

Medicaid costs for N.C. counties have increased by 10 percent or more in each of the last several years, said Rebecca Troutman, director of research and public technology for the N.C. Association of County Commissioners.

But revenue from property taxes, the primary means by which counties pay for Medicaid, is increasing by less than 8 percent annually.

Medicaid costs are troublesome for poor, rural counties where eligible recipients make up 20 percent or 30 percent of the population.

“All new tax revenue is being funneled to Medicaid,” Troutman said.

Medicaid is a federal entitlement program that pays medical costs for qualified individuals and low-income families.

The federal government determines who will receive Medicaid benefits, but individual states have flexibility regarding certain benefits. North Carolina provides its residents with 28 of the 34 optional benefits.

For the 2005 fiscal year, the General Assembly has allocated $2.16 billion, or 15.9 percent of the state budget, to Medicaid. This is compared to the 11.8 percent allocated to the UNC system.

N.C. counties, which are responsible for 15 percent of the state’s share, will pay $440 million on top of the legislature’s $2.16 billion.

“Half of our counties are paying more on Medicaid than on school construction and renovation and other costs associated with education,” Troutman said.

The fate of the proposals to lift the burden placed on counties is uncertain, as the state faces painful spending cuts in Medicaid and other budget areas.

“I can understand the perspective of both the state and the counties,” said Gary Kugler, social services administrator for the N.C. Division of Medical Assistance. “Neither the state or the counties have the money.”

 

Contact the State & National Editor at stntdesk@unc.edu.