Counties present case to Medicaid commission

By Todd McGee
Director of Communications

Also see:
President's Perspective: Counties tell of Medicaid’s true costs

Third Vice President David Young and President Breeden Blackwell field questions from the commission. (Photos by Jason King)

Rapidly rising Medicaid costs are starting to hamper many counties’ ability to provide basic services for their citizens, leaving such critical needs as education and EMS care severely under-funded.

A dozen county officials from across North Carolina converged on the Legislative Office Building in downtown Raleigh on Nov. 16 to carry this message to state legislators.

NCACC President Breeden Blackwell of Cumberland County was the first of seven county commissioners or managers to speak to the Blue Ribbon Commission on Medicaid Reform, which is co-chaired by Sen. William Purcell (Scotland), Rep. Edd Nye (Bladen) and Rep. Julia Howard (Davie).

“Our counties realize the importance of Medicaid,” Blackwell said in his opening remarks. “While the Medicaid program is critical … the county funding of services is not working. County budgets cannot keep pace with the medical inflationary increases.”

Blackwell pointed out that the property tax base increases by an average of 7.7 percent each year while Medicaid costs are increasing by an average of more than 10 percent. As a result, Blackwell said, counties are forced to either raise taxes or cut services elsewhere to fund Medicaid.

Blackwell and a series of county representatives painted a stark picture of strained county budgets trying to keep up with spiraling Medicaid costs. North Carolina and New York are the only states that require counties to contribute to the non-federal share of all Medicaid services.

In North Carolina, counties are required to pay 15 percent of the non-federal share. In 2004-05, that is projected to be approximately $448 million for all North Carolina counties, said Carol Shaw of the General Assembly’s Fiscal Research Division. In addition, counties pay the entire non-federal share of the administrative costs, equaling about $71 million per year, making the total county Medicaid bill for this fiscal year greater than half a billion dollars.

“This has been the most important goal the North Carolina Association of County Commissioners has brought to the General Assembly in the last 10 years,” said Jones County Manager Larry Meadows. “Any help you can give us would truly help us create ‘one North Carolina.’”

From left to right: Robeson County Commissioner and NCACC Past President Noah Woods, Jones County Manager Larry Meadows, NCACC Executive Director Ron Aycock, Alexander County Chairman and District 13 Director Norris Keever, Alexander County Manager Rick French, Person County Commissioner and District 8 Director Jimmy Clayton, and Franklin County Commissioner Raymond Stone listen as President Breeden Blackwell addresses the commission.

Meadows said his county has needs that are going unmet because Medicaid costs are eating up more than 20 percent of the revenue generated by the property tax.

“We have a growing need for things like EMS care in Jones County,” he said. “If you give us relief, we won’t cut taxes. We will put it back into our communities.”

NCACC Past President Noah Woods of Robeson County echoed that sentiment, saying “a one-cent reduction in the amount of our tax contribution to Medicaid would generate $350,000 that could help us to better provide for the education of our youth.”

Alexander County Commissioner and District 13 Director Norris Keever said his county could increase its school current expense appropriation by 39 percent if the county were relieved of its Medicaid burden. According to Keever, Alexander County will spend more than $1.7 million on Medicaid services costs in 2004-05.

Medicaid is a federal/state program designed to provide medical care for the poor and medically needy. Federal law requires that the program be administered uniformly statewide, meaning that any Medicaid option that a state offers must be offered to every resident in the state.

The federal and state governments determine who is eligible to receive services, which services will be offered and what the provider payments will be. Counties have no say in any of these decisions.

According to a survey commissioned by the NCACC several years ago, most states do not require any county participation in Medicaid cost-sharing. In a few states, counties participate in long-term care coverage under Medicaid, mainly because counties in those states operate the long-term care facilities.

“In North Carolina, 85 percent of the state’s share of Medicaid is paid equally by all North Carolinians, while the other 15 percent is paid for by counties,” said Bertie County Manager Zee Lamb. “Our position is that all 100 percent of the non-federal share should be spread equally among all North Carolinians.

Bertie County Manager Zee Lamb explains how Medicaid costs are impacting other services in Bertie.

“In Bertie County, where 33 percent of our population is eligible for Medicaid, 15.7 percent of our budget goes to fund Medicaid. Bertie County is No. 1 in the amount of budget spent on Medicaid, and we are also No. 1 in per capita costs.

“We also rank 97th in our ability to fund education. There is a direct correlation between high Medicaid costs and low per-pupil spending.”

Gaston County Commissioner Pearl Burris-Floyd pointed out that her county’s share of Medicaid had grown from $7.1 million in 2000 to $13.9 million for the current fiscal year – an increase of more than 20 percent per year.

“None of our revenues have grown that fast,” she said. “This has had a tremendous negative effect on our economic progress. The very counties that are hardest hit by the economic downturn are forced to pay the most – creating a major disincentive for economic development.”

After the commissioners spoke, Shaw presented several options she had developed that would fully or partially relieve counties of the Medicaid burden. She divided the proposals into two categories – those that would provide relief to all 100 counties, and those that would provide relief targeted specifically to counties hit the hardest by the Medicaid bill.

“One of the advantages to providing relief for all 100 counties is that all counties benefit,” she said. “One of the disadvantages is that it will be more expensive. It also doesn’t take into account the impact Medicaid has on a county’s individual budget. All counties are treated equally.”

The first option involved a five-year phase-out that would eliminate the county share of Medicaid funding by 2010. Each county would see its portion of the non-federal share cut by 20 percent each year until it is completely eliminated. Shaw estimated that by 2010, the first full year in which counties would have no participation in Medicaid funding, the cost to the state would be $710 million.

Another option would phase out the county share of acute Medicaid expenditures over the same five-year schedule but would require counties to continue to pay a share of long-term care Medicaid expenditures. Under this plan, the county share of Medicaid would decrease from $448 million for 2005 to approximately $227 million for 2010.

The third option would be to cap the costs at the current 2005 level. State appropriations would cover any amount over the $448 million. By 2010, this option would cost the state an estimated $262 million per year.

Shaw also offered three options that would provide targeted relief. The first of these proposals target counties in which at least 25 percent of the population is eligible for Medicaid. Shaw said that 20 counties would qualify under this plan, which would reduce from 15 percent to 10 percent the amount of the non-federal share that these counties would be required to pay. By 2010, these counties would be saving $37 million a year, but the total county Medicaid bill would have increased to $673 million.

Gaston County Commissioner and District 12 Director Pearl Burris-Floyd asks the commission for help with Medicaid expenses.

The second option would target reductions over a four-year period to counties based on statewide per capita Medicaid expenditures. In this plan, 64 counties would qualify for a reduced rate because they pay more per capita than the state average. By 2009, the estimated savings per county would range from $52,000 a year for Franklin to $8.6 million for Robeson.

The third option would also be based on the per capita averages. In this formula, each county’s per capita rate is computed, and then an average of the 100 county rates is determined to provide an average county per capita rate. Any county with a higher per capita rate would qualify for relief. In this plan, 31 counties would see their Medicaid share reduced to 10 percent, another 10 would see their share reduced to 5 percent, and four counties – Bertie, Northampton, Graham and Columbus – would have their Medicaid share eliminated completely.

After her presentation, Shaw noted that none of her options utilized the economic distress tier system established by the Bill Lee Act of 1996 because, she said, “the tier system does not always line up with Medicaid.”

The commissioners’ pleas did not land on deaf ears. Several members of the committee expressed an interest in examining the possibility of combining the cap with some targeted relief for the hardest-hit counties.

“There’s only one way to fix this, and that’s to phase it out,” said Rep. Howard “It’s going to continue to get worse and worse and worse as time goes on.”

Several commission members were complimentary of the case made by county officials.

“They have put together the very best presentation that I have ever seen to date on the actual situation,” said Northampton County Social Services Director Dr. Al Wentzy.

The Blue Ribbon Commission on Medicaid Reform will report a comprehensive package of reform measures to the 2005 session of the General Assembly in early spring.