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EDITORIAL: Relief At Last?: N.C. House Would Cap Counties' Medicaid Costs

Posted on: Tuesday, 13 June 2006, 06:00 CDT

By The Charlotte Observer, N.C.

Jun. 13--Medicaid costs are killing N.C. counties that have a low tax base and a high population of low-income residents. Now the N.C. House is tossing those counties a life preserver. The House budget proposal would cap Medicaid expenditures at 2005-06 levels and provide targeted relief to some of the hardest-hit counties. It's an errand of mercy that the state can afford and some counties desperately need.

North Carolina requires counties to pay a fixed share of the cost of Medicaid -- and is the only state to do so -- even though the state and federal governments make all decisions regarding eligibility, services and reimbursement rates.

The result is a rapidly growing expenditure that counties can't control. In Mecklenburg, 15.5 percent of residents qualified for Medicaid in 2004. Medicaid costs have grown by 93 percent since 2000 and consumed 2.7 percent of the 2005-06 budget.

Many counties were hit harder. According to the N.C. Association of County Commissioners:

-- Fifty of the 100 counties spent more on Medicaid last fiscal year than on school facilities, another costly county responsibility.

-- In 48 counties, more than 20 percent of residents were eligible for Medicaid in 2004.

-- In 15 counties (including Cleveland, Gaston and Anson in this area), the cost of Medicaid has more than doubled since 2000.

-- In 14 counties (including Cleveland and Gaston), Medicaid consumed more than 10 percent of the counties' 2005-06 budget.

-- In 2005-06, 45 counties increased property taxes -- 19 of them by at least 10 percent.

Capping Medicaid costs would help counties stabilize their spending and tax rates. The House should do it, and the Senate should follow suit.

Another big help would be to give counties a broader choice of revenue sources to lessen dependence on property taxes.

Rep. Mickey Michaux, D-Durham, introduced legislation to do that in the 2005 session. House Bill 1142, titled Local Tax Menu With Voter Approval, would give cities and counties a menu of optional revenue sources, including an additional 1-cent local sales tax, a local impact tax, meals tax, occupancy tax, land transfer tax and income tax. The bill was referred to the House Finance Committee, where it rests peacefully.

Why not give local governments those options? Local officials know local needs better than Raleigh does. Local government would need local voters' OK to impose any of the taxes. Legislators should give local people broader authority to tax themselves to meet local needs.

More editorial comments

On Charlotte.com, select Opinion and read:

-- Associate Editor Jack Betts' appreciation of UNC President Emeritus Bill Friday's remarks at the recent memorial service for Hugh Morton.

-- Two top state officials' defense of Mike Easley in response to Associate Editor Mary Newsom's blog item, "Governor envy."

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Copyright (c) 2006, The Charlotte Observer, N.C.

Distributed by Knight Ridder/Tribune Business News.

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Source: The Charlotte Observer (Charlotte, N.C.)

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