NCPA - National Center for Policy Analysis


February 8, 2006

North Carolina is one of the eight states that administers Medicaid through counties and is the only state that requires counties to cover a fixed percentage of Medicaid costs; however, program expansion and higher medical costs have pushed county budgets over the edge, says Joseph Coletti of the John Locke Foundation.

Currently, North Carolina counties pay 15 percent of the state's share of local Medicaid costs, or about 5.5 percent of the total Medicaid bill, but have little control over how that money is spent or the rate at which their costs will grow, says Coletti:

  • On average, counties must commit 10.6 percent of their property tax revenues to Medicaid.
  • In Robeson County, Medicaid expenses equal 39 percent of the property tax and Scotland County -- which has the highest property tax rate in the state at $1.10 per $1,000 in assessed value -- has cut one-tenth of its work force and not provided a raise for its remaining employees over the past three years to accommodate Medicaid without further tax increases.
  • In short, counties are forced to transfer wealth from their workers to Medicaid recipients, and half of all counties spend more on Medicaid than on school construction, building improvements, public safety and other priorities.
  • Overall, counties will pay $470 million for Medicaid in fiscal year 2005-06 and an increase of 48 percent in five years.

Moreover, as a first step to reforming Medicaid in North Carolina, the General Assembly should take the advice of its Blue Ribbon Commission on Medicaid Reform and decrease the county share by three percentage points a year starting in fiscal year 2006-2007, says Coletti.

Source: Joseph Coletti, "Carve the Medicaid Turkey," John Locke Foundation Spotlight, no. 272, November 21, 2005.

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