New York to phase out counties’ Medicaid costs;
North Carolina now alone with county share plan

More on Medicaid relief

North Carolina is now the only state that passes on part of all Medicaid costs to counties, thanks to the New York State Legislature’s decision to phase out its counties’ share. North Carolina and New York had been the only two states that required counties to pay a fixed percentage of the state’s share of the federal Medicaid program. The New York agreement, which was signed into law April 19, calls for the state to cap the county’s costs for 2006 at a 3.5 percent growth rate. That rate is reduced to 3.25 percent in 2007 and 3 percent in 2008. After 2008, the state will assume full administration of the Medicaid program with a capped local contribution.

Currently, North Carolina counties pay 15 percent of the state share of the Medicaid program. For 2004-05, the county share is projected to be around $440 million. State budget analysts project the county share to increase to at least $470 million for 2005-06.

“The county funding of Medicaid services is not working,” said North Carolina Association of County Commissioners President Breeden Blackwell, a Cumberland County commissioner. “County budgets cannot keep pace with the medical inflationary increases. The average growth in our property tax base is about 7.7 percent each year, while Medicaid costs have been increasing by more than 10 percent a year in recent years. In the past five years, the county share has increased 67 percent. This is forcing counties to either raise taxes or cut services to fund a program over which counties have no control.”

Medicaid is a federal health program for the poor, elderly and disabled. Each state administers its own Medicaid program but receives the bulk of its funding through the U.S. Centers for Medicare & Medicaid Services (CMS). Counties do not determine which services are offered, who is eligible to receive the services, or the provider rates. The state and federal governments set all eligibility requirements. In recent years, the state has voted to provide additional services beyond the minimum required to receive federal funding and to make more people eligible for services, thereby increasing the county costs.

In 20 counties in North Carolina, 25 percent of the population is eligible for Medicaid. Fifteen counties spend more than 10 percent of their budget to pay the state share of Medicaid, and 48 counties spend more on Medicaid than they do for school construction and other capital needs.

"This Medicaid burden is making it difficult for counties to keep pace with other demands, like school construction,” said Blackwell, a retired educator. “The state’s expanding population and recent decisions by the General Assembly to reduce class sizes in the lower grades are requiring many counties to build new schools or expand or renovate existing schools. But when nearly half the counties in the state are spending more on Medicaid than they are on school construction, it makes it very difficult to keep up with the demand.”

In 2004, the N.C. General Assembly created the Blue Ribbon Commission on Medicaid Reform. Among that bi-partisan commission’s recommendations was to phase out the county share of Medicaid in five years and to cap the county costs at the 2004-05 levels. Several bills have been introduced in the General Assembly that would accomplish these recommendations (visit our Medicaid relief Web page to view the bills that have been filed).

“We are grateful for the attention that the General Assembly is giving to this matter, and we truly appreciate the bi-partisan support that the various bills have received,” Blackwell said. “This is a critical issue facing North Carolina’s counties, and we are asking the General Assembly to provide us some help so that North Carolina counties can continue to remain strong, vibrant partners with the state.”