JLF Memo
Jun. 6th, 2011: - johnlocke.org Manage Subscriptions

Budget Fight Nearly Over
By Joseph Coletti

It is yet to be known if Gov. Perdue will veto the budget compromise or pocket it for 10 days so that it passes without her signature. Not counting funds for the state highway patrol, the compromise spends $19.5 billion, with $4.5 billion in the Department of Health and Human Services (DHHS). The starting point for the year was $20.8 billion, with $4.9 billion in DHHS.

The biggest reductions are in Medicaid ($356 million), mental health ($58 million, mostly one-time), central management ($20 million), and social services ($16 million).

To "level the playing field" with state-owned hospitals and to take advantage of Medicaid's perverse payment system, the budget saves $68 million in the first year through new assessments on providers.  It also brings in an
additional $1.2 billion in Federal dollars. Legislators expect $90 million in additional savings from the Community Care of North Carolina (CCNC) managed care plan and another $10 million from mental health waivers. It seeks savings of $119 million through lower provider rates and elimination of inflationary increases for providers. Another $16.5 million in savings comes from service changes. If the state had the option to reform Medicaid and reduce enrollment, it could provide better services to those most in need, but ObamaCare prohibits reasonable changes, so everyone on Medicaid faces reduced services and doctors face lower payments. We've addressed ways to reform Medicaid and so did Brian Blase and Dr. Clare Gray.

State Employee Health Benefit Premiums
By Nicole Fisher

When she vetoed the original State Employee Health Plan (SB265) North Carolina Gov. Bev Perdue indicated that she opposed the increase in premiums, although her own budget proposal would have include premiums, too. With the increase, the total employee’s contribution for their health benefits would have been about 2.7 percent. Although this would have saved NC taxpayers an estimated $400 million over the next two budget years, the governor decided against it.

Nevertheless, on May 23 the separate follow-up bills (SB323/HB578) were allowed to become law without Gov. Perdue’s signature because it delays the monthly premiums for some state employees by as much as a year. The minimal increase in fees do not, however, come close to meeting the states $30 billion unfunded liability.

So what is all the fuss about? Gov. Perdue would have you believe that state employees, especially teachers, cannot afford the individual $11 month premium contribution to their health benefits. This doesn’t seem to be the mindset though in any other state evaluated by the John Locke Foundation. Every other state has taken a stance that without individual contribution and accountability the state health plans cannot survive. Budget deficits, looming state health plan bankruptcy and rising health care costs are making it impossible for taxpayers to fund the entire plan.

In a ten-state comparison, we found that even the proposed increase to $11 a month would leave North Carolina with the lowest percentage of employee contributions to their health plan. Whether likening North Carolina to other southern states or states with collective bargaining for government employees, it has the lowest monthly employee contribution; with states such as Tennessee and California placing 20-30 percent of the state health plan premiums on individuals.

When comparing North Carolina to other states, it makes you wonder what Gov. Perdue was really trying to accomplish with her veto.

Midwives and Music Therapists
By Joseph Coletti

The legislature actually has a committee that deals exclusively with new licensing boards because licensing barbers and hairbraiders is not intrusive enough. Among the proposed licenses this year are ones for music therapy, radiologic technicians, and midwives who are not nurses. As Sara Burrows of Carolina Journal put it, committee meetings consist of, "Listening to professionals from various occupations ask lawmakers to regulate their competitors out of business by requiring them to get a license to work in their field."

Our paper on eregulating health professionals reviews some of the reasons why licensing limits access and increases cost without improving the quality of care. We've also addressed the question of credentials in a previous newsletter.

What is truly amazing about licenses is the variety of reasons given for needing one. Midwives are fighting hospital-based doctors so they can help women give birth at home. Some do this already, but risk being accused of practicing medicine without a license, so they want a license. Doctors' arguments seem to come down to: pregnant women cannot make good decisions and will end up in the hospital with complications even with a midwife, so they should not have the option in the first place. Music therapists, on the other hand want to keep people from playing the wrong tempo.

To give an indication of the thinking behind most licensing, progressive Rep. Verla Insko is a sponsor or co-sponsor of all three bills, and pharmacist/lawyer Rep. Tom Murry sponsors the radiologic technician bill with her. The state should decriminalize midwives who assist in home births. There is already a national Music Therapy Association, so anyone can go to the site and find a registered music therapist. Can the state do more?


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