Medicaid burdens rural counties

Rural counties in North Carolina are in desperate need of relief from rising Medicaid costs, but the state’s budget situation is unlikely to offer much help — if any.

The Blue Ribbon Commission on Medicaid Reform will recommend in its final report that the state gradually take over the cost of Medicaid from county governments. They likely will ask that legislators cap the counties’ share at current levels and phase out county funding completely over a six-year period.

The counties’ share of Medicaid is more than $400 million, said Sen. Bill Purcell, D-Scotland, co-chairman of the commission. And rapid growth could drive costs up to more than $700 million in six years.

Purcell said Medicaid is over-burdening rural counties, where the program often eats up more than 10 percent of budgets, leaving less money for schools and other areas in need of funding.

The commission also recommends that the state further reduce the share of costs for counties where the Medicaid-eligible population exceeds 25 percent.

“The burden on rural North Carolina is that it takes so much of their budgets,” Purcell said. “… In the more affluent areas of the state, it doesn’t affect the budget as much.”

Sen. Kay Hagan, D-Guilford, co-chairwoman of the Appropriations and Base Budget committee, said legislators recognize the need but might not be able to do anything with the state facing a more than $1 billion deficit this year.

“There is fiscally no way this year that this state could tackle another $445 million in new spending,” she said. “I think it would be better if the federal government would pick up some of that.”

But Hagan said the state might look into helping poorer counties that are the hardest hit. Counties have been paying for Medicaid expenses with property taxes and are reluctant to raise them any more.

“Some of them already have some of the highest property taxes in the state,” Hagan said.

Medicaid is one of the fastest growing areas of the budget, she added. The state needs to look at curbing costs foremost.

“We have to look at our delivery system — how to get better access to problems before they go to emergency rooms,” Hagan said.

She said the state would benefit from working on wellness plans to prevent chronic illnesses that plague many Medicaid recipients.

North Carolina is not alone in its Medicaid woes. Steve Mosher, director of health care administration at Mary Baldwin College, said 50 percent of states are suffering from burgeoning Medicaid costs. And states are getting creative with their solutions.

Tennessee’s TennCare program is poised to drop more than 300,000 recipients. And Fla. Gov. Jeb Bush has proposed turning over Medicaid to the private sector.

Mosher said President Bush will propose a plan for privatizing Social Security, which many see as the first step to privatizing other government programs, including Medicaid.

“There’s a serious move to go toward market-based health care,” he said. “The operation of that can be exceptionally cruel — cruel to a lot of people who are expecting a lot of benefits.”

Other options include offering states a block grant, giving state governments flexibility to use the money as they see fit as long as it is used for health care. But Mosher said the money from a block grant simply might not be enough.

“On the one hand you have flexibility — that’s good. But on the other hand, where’s the money? States aren’t in favor of raising taxes. But the fact of the matter is someone has to pay the bill.”

And while the solution isn’t apparent, the situation is urgent.

“No one’s got an answer to this one,” Mosher said. “Everyone’s trying to patch the dike.”

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