Press Release

Counties’ Medicaid Mandate a Burden

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RALEIGH — North Carolina is the only state in the nation that requires counties to pay a fixed percentage of Medicaid costs. The General Assembly’s own Blue Ribbon Commission on Medicaid Reform recommended capping and reducing counties’ contribution to Medicaid. A JLF Spotlight report shows how the Medicaid requirement burdens counties.

Carolina’s counties spend up to 15 percent of their general fund budgets — and up to 39 percent of their property tax revenues — to cover the cost of Medicaid, writes Joseph Coletti, JLF fiscal policy analyst. Counties have no control over these spending mandates, a fact exacerbated by Medicaid’s rapid growth within county budgets — it now claims 18 percent more of county budgets than it did a mere five years ago.

“Medicaid costs more than school construction and building improvements in a majority of counties,” Coletti said. “Furthermore, those counties in the east and west that have already suffered the most economically are the ones that face the highest Medicaid burdens.”

North Carolina is one of only eight states that administer Medicaid through counties, and the only one to require counties to cover a fixed percentage (15 percent) of Medicaid costs. Coletti explained that while Medicaid is funded by property taxes, it is wholly separate from them.

“Medicaid grows far faster than property tax revenues, or any other revenue source,” Coletti said. “If the state does not restrain this growth, more counties will face the choice of cutting other services or raising taxes.” For example, he said, “Scotland County has already had to cut 10 percent of its workforce in the last three years.”

Coletti said the state should heed its own Blue Ribbon Commission on Medicaid Reform and gradually reduce the counties’ share of Medicaid until county payments have been eliminated. “This can be done without increasing taxes,” Coletti said. “There is potentially $1 billion in unnecessary spending in the buget right now.”

Joseph Coletti’s Spotlight, “Carve the Medicaid Turkey: State Should Eliminate County Share of Medicaid,” is available on the John Locke Foundation website. For more information, contact Coletti at 919-828-3876 or [email protected]

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We are North Carolina’s Most Trusted and Influential Source of Common Sense. The John Locke Foundation was created in 1990 as an independent, nonprofit think tank that would work “for truth, for freedom, and for the future of North Carolina.” The Foundation is named for John Locke (1632-1704), an English philosopher whose writings inspired Thomas Jefferson and the other Founders.

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