Relief finally a reality

Behind-the-scenes look at long road to Medicaid freeze shows many turns

By Todd McGee
Director of Communications

The sixth-century B.C. Chinese philosopher Lao-Tzu once wrote, “A journey of a thousand miles begins with a single step.”

More on Medicaid relief

County officials across North Carolina are hopeful that the temporary freeze for county Medicaid costs included in this year’s state budget marks the beginning of a journey that will result in a permanent fix. In addition to the freeze, House and Senate leadership have both pledged to support a “Legislative Study Commission on the Elimination of County Financial Participation in Medicaid Services.”

“We believe this is a first step toward finding a solution to relieve counties of the Medicaid burden,” said NCACC Executive Director David F. Thompson. “This temporary freeze will help counties as they attempt to deal with ever-increasing school construction needs, and the study committee will give us some time to work with the state in an effort to resolve this issue once and for all.”

According to Thompson, the progress on counties’ No. 1 legislative issue is the result of the active involvement of the NCACC Executive Committee, led by President Kitty Barnes of Catawba County, and county commissioners from around the state, who provided intelligence to Association staff and Board of Directors members from their conversations with legislators.

“Throughout the session, our officers made numerous trips to Raleigh to lobby for Medicaid relief and stayed in constant contact with members of their legislative delegation through phone calls, e-mails and personal visits,” said Thompson. “This grassroots advocacy really showed how important this issue is to our commissioners and really made a strong impression on legislators.”

The concentrated effort over the past year by county commissioners boiled down to a few tense days in late June as Senate and House negotiators hammered out the final details of their $18.9 billion budget. According to all accounts, the level of county Medicaid relief was one of the final sticking points between the two sides.

In the end, the Senate and House reached a compromise that resulted in a temporary freeze for counties at 2005-06 levels, as long as the cost for the freeze does not exceed $27.4 million.

Leaders in both chambers also committed to the study committee, which will have to be passed in a separate bill. If approved, the 14-member commission would include two county commissioners, one county manager and one county finance officer.

During the 2005 session, the House had included $15 million of one-time relief for counties in its budget proposal, but that aid was stripped out when the House and Senate negotiated the final budget. This year, with county commissioners sending countless e-mails and making numerous phone calls in the waning days of the budget battle, legislators clearly understood that counties were watching developments in Raleigh. Several legislators acknowledged to Association staff that they had received the message loud and clear from their constituents and jokingly said they were afraid to go home without some sort of relief.

“We would not have been able to achieve this relief were it not for the tireless efforts of county commissioners across the state who actively worked to make sure the Legislature understands why counties need to be relieved of the Medicaid burden,” Thompson said.

Laying the groundwork

As Association staff began preparing for its annual round of district meetings in April, the House Select Committee on Health Care announced that it would support using $65 million of state Medicaid savings to fund a permanent cap of county Medicaid costs and provide additional targeted relief for the hardest-hit counties.

With momentum on the counties’ side, Director of Research and Public Technology Rebecca Troutman worked with the Association’s Department of Communications (Jason King and Todd McGee) to put the finishing touches on a “Medicaid Meeting in a Box,” approved by the Board of Directors as part of the overall Medicaid relief strategy. The Association made a box for each county that included a PowerPoint presentation tailored for that county and other materials to be used to tell the Medicaid story. General Counsel Jim Blackburn also provided training for commissioners on effective lobbying techniques at each district meeting.

Each county was urged to set up meetings with legislators prior to the May 9 beginning of the short session to continue building support and momentum. Numerous counties responded. Also during April, Thompson and Troutman visited many House and Senate members to help them understand the importance of Medicaid relief. And throughout the spring and summer, dozens of newspaper editorials supporting a state takeover of the county Medicaid share were published in response to Association press releases.

Their cup overfloweth

Shortly before the General Assembly convened, news surfaced that state coffers were overflowing with a surplus of greater than $2 billion. But when Gov. Mike Easley released his budget proposal on the opening day of the session, he did not provide any Medicaid relief for counties.

Association legislative staff soon got wind that the Senate was planning to follow suit. As a result, Thompson said he made the late decision to change the annual County Assembly Day to a daylong Medicaid relief lobbying effort. More than 300 county officials from around North Carolina turned out May 17 and patrolled the halls of the General Assembly, sporting buttons touting “Medicaid Relief for Counties.” Legislators had to run a gauntlet of county commissioners in order to reach their respective chambers.

“We generated a lot of buzz and publicity during this session, and the turnout on County Assembly Day contributed greatly to increasing the visibility of this issue in the Legislature,” Thompson said. “I was amazed at how quickly we could put out the call to arms and have so many people respond.”

The Senate spending plan, released a few days later, also didn’t include any Medicaid relief for counties. Association staff, however, continued to work with Senate Majority Leader Tony Rand (Cumberland) behind the scenes in an effort to hammer out a permanent solution.

Rand had pitched a proposal in February to the Association’s Board of Directors that would swap a penny of the county sales tax in exchange for the state assuming the entire Medicaid share. In return, the state would grant counties the option of levying another local-option one-cent sales tax to make up for the lost revenue. This plan would have increased the statewide sales tax to 8 percent. The Board of Directors could not reach a consensus on Rand’s proposal, and the split grew even more pronounced in light of the state’s budget surplus.

During the early days of the legislative session, the Association returned to Rand with a proposal for discussion to continue exploring an avenue for a permanent solution. The proposal would have resulted in counties giving up the “Article 44” half-penny sales tax to the state, along with the county ADM fund revenues, in exchange for the state taking over the Medicaid share. The state would then provide counties another local-option, half-cent sales tax to replace the Article 44 sales tax. The plan would go into effect July 1, 2007. With the state’s announced desire to end the temporary half-cent sales tax that is set to expire June 30, 2007, this plan would maintain the statewide sales tax rate at 7 percent.

A House undivided

While Rand and the Senate leadership mulled over the Association’s proposal, the House, led by Rep. Bill Owens (Pasquotank) – a past president of the NCACC – loudly voiced its support for county Medicaid relief. Shortly after receiving the Senate’s budget proposal, the “Big Chairs” – the seven House Appropriations Committee co-chairs and the six Finance Committee co-chairs – met to discuss their chamber’s priorities. The “Big Chairs” unanimously agreed to support the county Medicaid relief proposal contained in H1968 (co-sponsored by Reps. Edd Nye, Owens, Thomas Wright and Bob England).

This bill mirrored the recommendations of the House Select Committee on Health Care and contained a permanent cap at 2005-06 levels and $35 million in additional targeted relief based on a county’s percentage of Medicaid-eligible residents. This recommendation was eventually included in the House’s budget proposal, which was overwhelmingly approved on June 15.

“This is a major step forward in our effort to relieve counties of the Medicaid burden,” Thompson said following the passage of the House budget proposal. “We are grateful that our legislators have heard our pleas for help. This action will help stop the bleeding and will give us some time to work out a permanent financing solution.”

Conference call

After the House passed its budget and the Senate rejected the proposed changes, the two sides appointed budget conferees to hammer out the final details. In years past, the final agreement would largely have been done behind closed doors, with the most contentious items decided by House Speaker Jim Black (Mecklenburg) and Senate President Pro Tem Marc Basnight (Dare). But given many of the controversies swirling around the General Assembly regarding budget practices and campaign contributions, Speaker Black made it clear that he expected the conferees to negotiate the final deal largely in the open.

The two sides initially set a goal to have the budget adopted by June 30, in time for the new fiscal year. The first week of negotiations went smoothly, but by the middle of the second week, cracks began to surface, and the level of Medicaid relief was turning into a major sticking point.

As the budget conferees were negotiating, Rand set up a meeting with Association legislative staff and several other Democratic senators to offer his response to the Association’s proposal. Rand told Association staff that he wanted to stick with his original one-cent sales tax swap proposal.

Thompson thanked the senators for their interest in county Medicaid relief but reiterated that the Board of Directors was split on the one-cent sales tax swap. Thompson told the gathering that while the Association was committed to the House proposal for 2006-07, the Board of Directors was also committed to studying avenues for permanent relief.

As the stalemate dragged on, Thompson and Troutman were given a rare opportunity June 22 to speak at a meeting of the conferees about the importance of including a permanent cap. The conferees generally don’t hear from outside speakers during the budget process, and this was the first time the Association had enjoyed this access.

Later that afternoon, Deputy Director Patrice Roesler and Troutman were invited to address a meeting of the House Republican Caucus. The appearances by Association staff underscored the seriousness with which the legislators were taking county Medicaid relief.

“The fact that we were behind some of the closed doors during the critical phases in this process underscored how seriously the legislators were taking our commissioners’ concerns,” Thompson said. “I really believe that we have set the stage for continuing discussions to reach a permanent solution.”

As conferees were negotiating the final deal, Thompson and Troutman became fixtures in the halls of the General Assembly. The two strategically stationed themselves near restrooms to corner conferees to ensure that county Medicaid relief remained in the budget. After all other lobbyists had left, Thompson and Troutman remained.

The battle is done, but the fight continues

On Friday, June 30, Speaker Black announced that budget conferees had reached a deal that would be voted on the next week – after the long Fourth of July holiday weekend. For the first time, county Medicaid relief was included in the state budget. The compromise will provide relief to all counties, Thompson said.

“It may not have been all that we had hoped for in terms of financial relief,” Thompson said, “but at least we have an acknowledgement from the state that this is an important issue to counties. The challenge that lies before us now is to find a permanent solution that is also beneficial to the state. We are committed to continue working with the General Assembly to find this solution and relieve counties of this Medicaid burden.”

To paraphrase 18th century naval hero John Paul Jones, we have just begun to fight.