Senate leaders: 'Medicaid is driving' state budget

Posted May 20, 2013

The state Division of Medical Assistance oversees North Carolina's Medicaid program.

Senate budget writers say their plan, rolled out Sunday night, doesn't make many big spending changes - with one very large exception.

The single largest increase by far in the Senate budget plan is an additional $584 million dollars plowed into Medicaid in the upcoming year. Next year, the increase will be $796 million.

Senate leaders say that has to change.

"That’s the message coming out of this budget," Sen. Ralph Hise, R-Mitchell, told the Senate Budget Health subcommittee at Monday's meeting on Senate Bill 402. 

“Medicaid is driving everything in this state budget. These funds coming out are controlling what we do in education, what we do in transportation and highways," he said.

Republican leaders are hoping Governor Pat McCrory's bid to privatize Medicaid will lead to better cost control down the road. But that will take time: reforms on that scale have to be approved by the federal program through state waivers and plan amendments.

In the meantime, Hise says budget writers are doing what they can to control costs in the entitlement program.   

One proposal in the Senate plan would move many pregnant women off Medicaid and into the private insurance market. 

In the not-so-distant past, North Carolina had one of the nation's worst infant mortality rates. State leaders decided to offer Medicaid coverage to more pregnant women - up to 185% percent of federal poverty level - in hopes of reducing that rate. 

While the strategy seems to have worked, Hise says the advent of federal health insurance exchanges under the Affordable Care Act could save the state $20 million in the next year alone.

Pregnant women between 185% and 133% of federal poverty level (the federal cut-off for eligibility) would have to buy private insurance through the exchange. The state would pay their premiums during their pregnancies. Afterward, the women would have the option of continuing the coverage on their own. 

Because plan premiums in the exchanges are controlled for income, Hise says, they probably wouldn't be much more than $25 a month. But the women would almost certainly have to pay co-pays, deductibles, and other out-of-pocket expenses they wouldn't have to pay under Medicaid. 

Hise admitted the benefits under an exchange plan probably wouldn't be as rich as under Medicaid. "I don’t deny the fact that there are savings in doing this." But he said it offers women an advantage in setting them up with insurance they can afford to continue after childbirth, rather than dropping them, as the Medicaid program did.

Advocates for low-income women say that isn't much of an advantage, since those women could buy a policy on the exchange for themselves after their Medicaid coverage lapsed, anyway.

"On Medicaid, a pregnant women is not denied service because she doesn’t have the co-pay amount," Adam Linker with the NC Health Access Coalition told the committee. "The co-payments are higher in private insurance. Could she be turned away?"

Another proposal would shut down all three of the state's in-patient treatment centers for drug and alcohol addiction.

"These centers, residential treatment centers, have shown no evidence that they provide better outcomes than community-based treatments," Hise told the committee. "However, the cost for operating these centers is $158,000 per bed per year."

Senator Gladys Robinson, D-Guilford, asked whether counties or private entities would be able to cover the demand for in-patient treatment. Hise said there are no guarantees, but added that the state would put part of the savings into community-based treatment instead.     

"We have a need to provide these services," Hise said. "We just don’t believe the centers that are providing them do so in a cost effective manner."

The Senate budget would also move a large chunk of funding away from pre-K programs and into child-care subsidies, to be administered by county Departments of Social Services. The change would largely cut out the NC Partnership for Children, the non-profit that administers Smart Start.

The money that would have funded 2,500 seats in NC Pre-K will fund 2,600 seats in subsidized child care programs, which benefit more children, Hise said. “It is our belief that there is a stronger focus in the community looking at birth through 5 than just focusing on 4 year olds.”

The proposal also requires Governor Pat McCrory's administration to submit its Medicaid reform plans to the General Assembly for approval before taking the final steps to secure a waiver from the federal program. But Hise sounded optimistic about the prospect. 

"We can’t continue to be coming in here, year after year, biennium after biennium, with an unpredictable system," he said. "We have got to be able to control our Medicaid costs, and we have got to be able to forecast at the beginning of the year what those costs are going to be. And quite frankly, we can do neither until we reform the system." 

The full Senate Appropriations will hear amendments to Senate Bill 402 beginning at 8:30 am Tuesday. After that, the bill is scheduled for a hearing in Senate Finance at 1:00pm. It's expected to be on the Senate floor for votes Wednesday and Thursday. 


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  • almagayle50 May 29, 2013

    Funny, no one ever mentions medicaid fraud and the lack of stopping that. Funny, it's OK with the state auditor that Cardinal has $69 million in reserves, a figure that is likely to skyrocket as they slash everyone's services. Funny, the direct pay benefit works pretty well in Britain, but we can't even conceive of cutting out all the leeches in the chain in the US to lower the cost - probably because US women are so irresponsible and will use the money on men, liquor and drugs, or so I was told. Funny, no one is asking when fathers are going to be legally required to step up and assume equal responsibility for their handicapped children. When my son was diagnosed at 4 with autism but didn't really fit the definition, I was told by a physician that you have to be very careful in assessing your own child, because when you live with a situation for some time, the abnormal becomes normal. I think that is certainly true of government and all it's agencies. I don't know who is sick eno

  • maybelle May 22, 2013

    I don't like nmy boss so I will quit, I have kids in my house under 19 so I can get food stamps, insurance for free and hud.
    And if I am illegal my kids will have everything paid for till they are 19

  • greg69innc May 21, 2013

    If you are a drunk and a doped up individual be responsible for your choices and clean up your act and quit burdening everybody else as to why you struggle to get your act together

  • greg69innc May 21, 2013

    We certainly cannot fork out money our state doesn't have. The main idea I got from this and I agree with and that is folks need to take responsibility for themselves. Cut the phone bill down, quit driving expensive cars that really most people cannot afford and stop spending on money on wants rather than needs and go out and buy yourself some insurance and quit expecting the millions of people paying to the system to basically support yourself. We are adults and it is time many of us started acting like it.

  • stripe01 May 21, 2013

    Good thing North Carolina turned down all that federal money

  • franhunter1 May 21, 2013

    Please go online and read the NC Medicaid Manual. I know the program pays for babies, however I know the biggest cost to the Medicaid program is Long-Term Care expense. So when we have to come out of pocket to supplement granny's social security check to pay her nursing hoome care, we will realize it's not just babies.......... Medicaid is a broad program and there can be cuts,but by all means,read the currentt manual to see just how broad this program really is.

  • RDcallsit May 21, 2013

    and btw, this is by far and above the worst budget proposal I've ever seen. it's just so so bad and disgusting. who are the senate that they believe these are the right ideas???? did we elect these people. I can't believe it. I seriously can not believe our elected officials think this is good stuff. it's sickening.

  • RDcallsit May 21, 2013

    Hill55 don't get me started on all these babies being born in NC that will be citizens yet they are not financially secured by their parents but rather our state and federal FINANCIAL FREEDOM FOR THOSE COMING TO THE COUNTRY HAVING BABIES AND THEN RECEIVING MEDICARE AND WHATEVER ELSE OUR GOVERNMENT GIVES TO THOSE ARE NOT LEGALLY HERE... MAYBE A FREE COLLEGE DEGREE????? EVERYONE OF THESE BABIES ARE WEARING BRAND NEW GUCCI CLOTHES AND $100 SHOES... AND THE PARENTS TOO. BUT THEY NEED THE GOVERNMENT'S HELP??????????????????????????????????

  • junkmail5 May 21, 2013

    The states need to pay back that "free federal money" you ultra-progressive-nonthinking liberals are babbling about in 3-5 years. Were you aware of that? It's just a loan- Foghat001

    Uh... what?

    That's not true AT ALL.


    "For the "newly eligible population" (anyone not previously eligible in their state), the federal government will cover 100 percent of costs in 2014-16, and it will always cover at least 90 percent of the costs of this population."

  • freweeln May 21, 2013

    so how about taking a serious look at who is benefiting from Medicaid in our state? Plenty of folks who should be and I absolutely agree those who SHOULD be, should not fear being cut. That said, what about the ones whose children we are supporting because supposedly Mommy and Daddy are not living together or are divorced, or folks whose employers offer family health insurance but rather than have that money come out of their pay checks, they opt out and lie about their situation to have US pay THEIR way?