Friday, April 21, 2006
NC Counties' Medicaid Burden
While working up a political plan for the Halifax County GOP, I was challenged to explain the problem our General Assembly creates for poor counties like Halifax County by passing on 15% of federally and state-mandated Medicaid expenses for the counties to pay. The assignment was to do it in one paragraph. Naturally, being me, I ran a bit long:
"When Medicaid was first implemented in 1965, the federal government began paying 50% of the cost of the program and set standards for its implementation. States are allowed to expand eligibility, include more services than federally mandated, and control reimbursements and deductibles. Federal law also allowed the states to pass up to 15% of the total cost of Medicaid on to counties. Counties, however, have no say in anything related to Medicaid other than administering the program under state and federal laws, and paying up to 15% of the bill. Thus the counties receive an "unfunded mandate" to pay an amount essentially determined by the state laws. All 49 states other than North Carolina are now at least transitioning toward paying the full nonfederal share of Medicaid costs (the other 50%) rather than passing part of it on to the counties. In North Carolina, counties' main adjustable source of revenue is the property tax. Since Medicaid costs (like all medical costs) keep going up faster than the rate of inflation, and since the North Carolina General Assembly has implemented many expansions of Medicaid beyond that which is federally mandated, the counties must adjust their property taxes to cover the 15% share which the General Assembly continues to demand of them. This is not a problem for rich counties; they have large, growing (and younger) populations with large industrial plants, and therefore have a large property tax base relative to their Medicaid expenses. Poorer counties, however, tend to have small, declining, and older populations with few large prosperous companies. So the property tax base, composed mostly of land values, housing values, and companies' fixed capital, is relatively small in proportion to poorer counties' Medicaid-eligible (indigent or handicapped) population. This is why the 17 counties of northeastern North Carolina, with the states' largest Medicaid-eligible populations, also have the highest property tax rates. Companies will tend to locate where taxes are lowest, so jobs go to rich counties, productive young people have to move to where the jobs have gone, and leave an aging population behind. Farmers are also hard hit by property taxes, and they can't move their main asset (land), so they face an increasing tax bill to work the same amount of land. High taxes squeeze out productive enterprises which lowers the tax base which leads to another increase in the property tax rate. No wonder poor counties stay poor, they have to run as fast as they can just to stay in one place! Everyone knows this is a problem, they've known it for years. Phasing out the county share is the #1 legislative priority of the North Carolina Association of County Commissioners. Study groups keep telling the General Assembly that poor counties can't afford continued Medicaid costs. For instance, in 2005, the Blue Ribbon Commission on Medicaid Reform proposed many measures to phase out the county share or at least cap the amount counties must pay ($470 million total last year). Only a $15 million relief measure passed, and the Democrats who control both houses of the General Assembly deleted it in conference. And named another study group. That group of legislators reported out on March 28th, 2006, proposing to spend $65 million in one-time relief this year. We don't need the General Assembly to pay a little more of the bill this year (and probably brag about their generosity), we need them to pay the whole bill, now and for evermore, because they're the only ones who decided how big the bill would be! The North Carolina Republican Party has taken a principled stand in its Party platform renouncing unfunded mandates. If the Democrats who have overwhelmingly represented northeastern North Carolina for over a century can't see that their policies are keeping northeastern North Carolina poor, why not give their opponents a try?"
Quite a mouthful, no? That's my first draft, but note that it is already almost without examples and sourcing, and practically devoid of rhetorical flourishes and partisan invective. But, woe is me: I have to cut it down even more! (And no, this isn't the approach I make to Democrats, this really could be a nonpartisan issue, and the Halifax County Democratic Party was polite enough to me to adopt a resolution unanimously ('cause everyone knows it needs doing, as I said above) approving my proposition that "The nonfederal share of Medicaid program costs should be borne entirely by the North Carolina state government", but this is my Republican take on the issue.) Sadly, the reason I got stuck with the assignment to write a one-paragraph explanation of the county Medicaid share issue was that my letter to the editor of the Roanoke Rapids Daily Herald (published on April 16) went mostly over my fellow Republicans' heads due to the lack of background knowledge I've provided above. Somewhere, my 7th grade English teacher, Mrs. Kennedy, is chuckling, "I told you so!" Since this post is not long enough to really illustrate my dearth of pith, I'm including my letter to the editor here, too:
(headline by RRDH staff:) Solution creation or political posturing?
I read with interest the opinion piece "Needed
Relief" on the subject of the county share in funding
Medicaid in the April 6th edition of the Daily Herald.
The article was accurate in pointing out that North
Carolina is now the last state in the Union which
passes a fixed percentage of the state's Medicaid
costs on to the counties. Analysis of the relief plan
from the General Assembly's House Select Committee on
Health Care, however, was lacking.
The North Carolina Association of County
Commissioners (NCACC) is the best interest group to be
monitoring this issue, and their pleasure with the
Select Committee's plan of February 28th (spending $65
million) is understandable. But it should be noted
that this plan was only for temporary and partial
relief. The NCACC's goal continues to be phasing out
the county share entirely (the latest plan is to phase
it out over a 6-year period, dedicating funds from the
cigarette tax). During last year's General Assembly
session, a $15 million relief package was passed but
deleted from the budget in conference, and Senate
Majority Leader Tony Rand (D-Cumberland) mandated yet
another study group to seek solutions for the problem.
This is reminiscent of the results of the Blue
Ribbon Commission on Medicaid Reform, which delivered
its report to the General Assembly on January 18,
2005. This report spawned various bills, none of which
was enacted. Northampton County Department of Social
Services Director Dr. Al Wentzy, who sat on the Blue
Ribbon Commission, told me that while all the bills
attempted to secure various amounts of state money to
reduce the county share, or cap it, temporarily or
permanently, the clear solution the Commission favored
was to transfer funding responsibility from the
counties to the state once and for all.
With that background, let us examine the plan of
the House Select Committee on Health Care. It provides
$30 million to cap the county share of Medicaid
funding at the 2005-2006 level (that's good, the
unpredictability of the dollar amount counties must
cough up is a serious problem for poor counties'
budgeting process), and $35 million in relief targeted
to the counties with the highest percentages of
Medicaid-eligible people (that's also good, those
counties tend to be the poorest counties in the state,
and to have the lowest property tax bases, relative to
population). This plan, however, is framed as just
another one-time handout from the state surplus,
rather than the permanent fix we need.
Carolyn Johnson, Vice-chairman of the Halifax
County Board of Commissioners, means to bring up a
measure to make permanent relief from the counties'
Medicaid burden a legislative priority, probably at
the Board's meeting at 6:30 PM April 18th in the old
Commissioners' building in Halifax. This is not a
controversial measure, not for North Carolina's
poorest counties. Neither need it be a partisan
measure.
The North Carolina Republican Party already has a
platform plank denouncing unfunded mandates. The
Democratic Party purports to stand up for society's
most vulnerable members; well, North Carolina's
poorest counties here in the northeast have been
overwhelmingly represented by Democrats in the General
Assembly for a century now, and we're still poor. I'm
concerned that the Select Committee's plan of March
28th will either go nowhere, or be hailed as money
bestowed from the General Assembly's largess as a
reward for the local electorates' loyal support for
Democrats. Ken Chandler of Weldon, candidate for the
state Senate in district 4, has promised to make a
permanent solution part of his campaign and a
legislative priority while in office. Will Halifax
county voters step up and demand that General Assembly
incumbents fix this problem, or will it take a change
of party leadership in Raleigh to get this done?
- R. Kent Ross
Vice-chairman, Halifax County Republican Party
"When Medicaid was first implemented in 1965, the federal government began paying 50% of the cost of the program and set standards for its implementation. States are allowed to expand eligibility, include more services than federally mandated, and control reimbursements and deductibles. Federal law also allowed the states to pass up to 15% of the total cost of Medicaid on to counties. Counties, however, have no say in anything related to Medicaid other than administering the program under state and federal laws, and paying up to 15% of the bill. Thus the counties receive an "unfunded mandate" to pay an amount essentially determined by the state laws. All 49 states other than North Carolina are now at least transitioning toward paying the full nonfederal share of Medicaid costs (the other 50%) rather than passing part of it on to the counties. In North Carolina, counties' main adjustable source of revenue is the property tax. Since Medicaid costs (like all medical costs) keep going up faster than the rate of inflation, and since the North Carolina General Assembly has implemented many expansions of Medicaid beyond that which is federally mandated, the counties must adjust their property taxes to cover the 15% share which the General Assembly continues to demand of them. This is not a problem for rich counties; they have large, growing (and younger) populations with large industrial plants, and therefore have a large property tax base relative to their Medicaid expenses. Poorer counties, however, tend to have small, declining, and older populations with few large prosperous companies. So the property tax base, composed mostly of land values, housing values, and companies' fixed capital, is relatively small in proportion to poorer counties' Medicaid-eligible (indigent or handicapped) population. This is why the 17 counties of northeastern North Carolina, with the states' largest Medicaid-eligible populations, also have the highest property tax rates. Companies will tend to locate where taxes are lowest, so jobs go to rich counties, productive young people have to move to where the jobs have gone, and leave an aging population behind. Farmers are also hard hit by property taxes, and they can't move their main asset (land), so they face an increasing tax bill to work the same amount of land. High taxes squeeze out productive enterprises which lowers the tax base which leads to another increase in the property tax rate. No wonder poor counties stay poor, they have to run as fast as they can just to stay in one place! Everyone knows this is a problem, they've known it for years. Phasing out the county share is the #1 legislative priority of the North Carolina Association of County Commissioners. Study groups keep telling the General Assembly that poor counties can't afford continued Medicaid costs. For instance, in 2005, the Blue Ribbon Commission on Medicaid Reform proposed many measures to phase out the county share or at least cap the amount counties must pay ($470 million total last year). Only a $15 million relief measure passed, and the Democrats who control both houses of the General Assembly deleted it in conference. And named another study group. That group of legislators reported out on March 28th, 2006, proposing to spend $65 million in one-time relief this year. We don't need the General Assembly to pay a little more of the bill this year (and probably brag about their generosity), we need them to pay the whole bill, now and for evermore, because they're the only ones who decided how big the bill would be! The North Carolina Republican Party has taken a principled stand in its Party platform renouncing unfunded mandates. If the Democrats who have overwhelmingly represented northeastern North Carolina for over a century can't see that their policies are keeping northeastern North Carolina poor, why not give their opponents a try?"
Quite a mouthful, no? That's my first draft, but note that it is already almost without examples and sourcing, and practically devoid of rhetorical flourishes and partisan invective. But, woe is me: I have to cut it down even more! (And no, this isn't the approach I make to Democrats, this really could be a nonpartisan issue, and the Halifax County Democratic Party was polite enough to me to adopt a resolution unanimously ('cause everyone knows it needs doing, as I said above) approving my proposition that "The nonfederal share of Medicaid program costs should be borne entirely by the North Carolina state government", but this is my Republican take on the issue.) Sadly, the reason I got stuck with the assignment to write a one-paragraph explanation of the county Medicaid share issue was that my letter to the editor of the Roanoke Rapids Daily Herald (published on April 16) went mostly over my fellow Republicans' heads due to the lack of background knowledge I've provided above. Somewhere, my 7th grade English teacher, Mrs. Kennedy, is chuckling, "I told you so!" Since this post is not long enough to really illustrate my dearth of pith, I'm including my letter to the editor here, too:
(headline by RRDH staff:) Solution creation or political posturing?
I read with interest the opinion piece "Needed
Relief" on the subject of the county share in funding
Medicaid in the April 6th edition of the Daily Herald.
The article was accurate in pointing out that North
Carolina is now the last state in the Union which
passes a fixed percentage of the state's Medicaid
costs on to the counties. Analysis of the relief plan
from the General Assembly's House Select Committee on
Health Care, however, was lacking.
The North Carolina Association of County
Commissioners (NCACC) is the best interest group to be
monitoring this issue, and their pleasure with the
Select Committee's plan of February 28th (spending $65
million) is understandable. But it should be noted
that this plan was only for temporary and partial
relief. The NCACC's goal continues to be phasing out
the county share entirely (the latest plan is to phase
it out over a 6-year period, dedicating funds from the
cigarette tax). During last year's General Assembly
session, a $15 million relief package was passed but
deleted from the budget in conference, and Senate
Majority Leader Tony Rand (D-Cumberland) mandated yet
another study group to seek solutions for the problem.
This is reminiscent of the results of the Blue
Ribbon Commission on Medicaid Reform, which delivered
its report to the General Assembly on January 18,
2005. This report spawned various bills, none of which
was enacted. Northampton County Department of Social
Services Director Dr. Al Wentzy, who sat on the Blue
Ribbon Commission, told me that while all the bills
attempted to secure various amounts of state money to
reduce the county share, or cap it, temporarily or
permanently, the clear solution the Commission favored
was to transfer funding responsibility from the
counties to the state once and for all.
With that background, let us examine the plan of
the House Select Committee on Health Care. It provides
$30 million to cap the county share of Medicaid
funding at the 2005-2006 level (that's good, the
unpredictability of the dollar amount counties must
cough up is a serious problem for poor counties'
budgeting process), and $35 million in relief targeted
to the counties with the highest percentages of
Medicaid-eligible people (that's also good, those
counties tend to be the poorest counties in the state,
and to have the lowest property tax bases, relative to
population). This plan, however, is framed as just
another one-time handout from the state surplus,
rather than the permanent fix we need.
Carolyn Johnson, Vice-chairman of the Halifax
County Board of Commissioners, means to bring up a
measure to make permanent relief from the counties'
Medicaid burden a legislative priority, probably at
the Board's meeting at 6:30 PM April 18th in the old
Commissioners' building in Halifax. This is not a
controversial measure, not for North Carolina's
poorest counties. Neither need it be a partisan
measure.
The North Carolina Republican Party already has a
platform plank denouncing unfunded mandates. The
Democratic Party purports to stand up for society's
most vulnerable members; well, North Carolina's
poorest counties here in the northeast have been
overwhelmingly represented by Democrats in the General
Assembly for a century now, and we're still poor. I'm
concerned that the Select Committee's plan of March
28th will either go nowhere, or be hailed as money
bestowed from the General Assembly's largess as a
reward for the local electorates' loyal support for
Democrats. Ken Chandler of Weldon, candidate for the
state Senate in district 4, has promised to make a
permanent solution part of his campaign and a
legislative priority while in office. Will Halifax
county voters step up and demand that General Assembly
incumbents fix this problem, or will it take a change
of party leadership in Raleigh to get this done?
- R. Kent Ross
Vice-chairman, Halifax County Republican Party
