Legislators support county Medicaid relief despite governor's budget proposal

County officials around North Carolina were extremely disappointed that Gov. Easley’s proposed budget did not include any Medicaid relief for counties, especially in light of the state’s better-than-anticipated revenue collections and a nearly $2 billion budget surplus.

“The state’s improving economic situation has created a window of opportunity for the state and counties to sit down and figure out a way to relieve counties of this Medicaid burden once and for all,” said David F. Thompson, executive director of the North Carolina Association of County Commissioners.

“Many counties are having difficulty meeting the classroom demands caused by the governor’s initiatives to reduce class size in the lower grades. While the governor proposes reducing the state sales tax, counties across the state are considering property tax increases to keep up with spiraling Medicaid costs and exploding school needs. Counties need help from the state to meet their statutory mandate to provide adequate classroom space for students.”

For 2005-06, 45 counties were forced to raise property taxes, including 19 that experienced increases of 10 percent or more. In Robeson County, 33 percent of the revenue generated from the county’s property tax rate goes to paying the county’s Medicaid share. Almost 34 percent of the county’s residents are eligible for Medicaid, the highest percentage of any county in the state.

“How can Robeson County provide a sound, basic education for its children if one-third of its property tax revenue goes to fund a service that they do not control? Counties like Robeson County will continue to struggle to provide basic needs as long as the state forces counties to pay a portion of the state’s Medicaid expenses,” Thompson said.

A recent survey by the North Carolina Department of Public Instruction identified nearly $10 billion of school capital needs in the state, and more than 170,000 students in North Carolina currently attend school in mobile classrooms.

Bills were introduced in both the House and Senate this week that would provide substantial Medicaid relief for counties, including one plan that would phase out the county Medicaid share in four years. The Association’s goal is to provide immediate relief for counties whose Medicaid burden is disproportionately high, cap all county costs at current year level, and then eventually phase out the county share completely.

“We are grateful that members in both chambers and in both parties are actively supporting eliminating the county Medicaid share,” said Thompson. “As long as the state continues to force counties to subsidize the state’s Medicaid costs, then many of our children will have to attend school in trailers.”

H1968, which was introduced Thursday, May 11, is co-sponsored by Reps. Edd Nye (Bladen), Thomas Wright (New Hanover), Bob England (Cleveland) and Bill Owens (Pasquotank) and would provide $65 million of Medicaid relief for counties in 2006-07. The bill would cap county Medicaid costs at 2005-06 levels and provide $35 million of additional targeted relief to counties based on their percentage of Medicaid-eligible residents.

It is similar to S1209, which was introduced Tuesday, May 9. In addition, S1288 was introduced by Sen. Don East (Surry) on Wednesday, May 10. It calls for a four-year phaseout of the county Medicaid share.

North Carolina is the only state that requires counties to pay a fixed percentage of the non-federal Medicaid share, even though the state and federal governments make all decisions regarding eligibility, services and reimbursement rates. County Medicaid costs have increased by 85 percent since 2000, and 50 counties currently spend more on Medicaid than school construction. North Carolina counties are projected to spend nearly half a billion dollars on Medicaid in 2006-07.