A plan to help North Carolina counties cope with rising Medicaid costs is drawing fire from some legislators. The legislators might discuss the $27.4 million plan again this week.

“This is grossly unfair,” said Rep. Julia Howard, R-Davie, during a session of the House Select Committee on Health Care on Aug. 29. “It’s grossly unfair. I don’t know how to fix it.”

Other lawmakers echoed Howard’s concerns as they learned details of the plan. It promises up to $27.4 million in state funding to cover counties’ growing Medicaid bills during the next year.

Under current rules, there’s no guarantee all 100 counties will have access to the new funding. Instead, a county will start accessing the new funds once it reaches the level of its 2005-2006 Medicaid spending. As soon as the county taps the new funding, there’s no limit on its use of the state money until the $27.4 million is gone.

“That might be nice for my county because we’re going to spend our money real quick,” said Rep. Deborah Ross, D-Wake. “If we can keep drawing on the $27 million, we would do that. But that might not be fair to some of the other counties.”

Other representatives agreed. Some questioned why state Medicaid authorities had not split the $27.4 million proportionally among all counties.

“It looks to me like there could be 100 ‘sub’ accounts,” said Rep. Marian McLawhorn, D-Pitt. “And if you take my county, we know what we spent last year. When we hit that max, then we could go into this other [fund] that’s supposed to kick in, and then they get that amount and nothing more until everybody has used up their portion.”

North Carolina is the only state that forces county governments to pay a fixed percentage of the cost of Medicaid, the federal program that provides health insurance for low-income families and individuals. Lawmakers estimated this summer that counties would spend a total of $480 million this year to cover that mandate. Medicaid costs eat up as much as one-third of some county budgets.

The House had pushed during state budget negotiations for a cap on counties’ Medicaid costs. “The intent was to hold everybody at the same level they spent at last year first,” said Rep. Bill Owens, D-Pasquotank, one of the House’s chief budget negotiators. “The House argued time and time again that the counties be held harmless — period.”

But House and Senate negotiators eventually agreed to set aside the $27.4 million as a “fixed amount,” Owens told colleagues on the health care committee. Still, Owens said he did not expect the new money to be available only on a first-come, first-served basis.

That arrangement has also caused concerns for some county leaders. “To be quite honest, our biggest fear is that there will be some disaster in a county, and all of a sudden they have to start drawing down a lot of money,” said Patrice Roesler, deputy director of the N.C. Association of County Commissioners, “or the Wakes and Mecklenburgs will use theirs up first.”

Members of the committee agreed they want to change the rules to help smaller counties. It’s unclear whether they will be able to make any changes before 2007.

The committee’s co-chairman, Rep. Edd Nye, D-Bladen, suggested that legislative staff could negotiate changes with Medicaid staff. Others wanted the General Assembly to take action.

Owens suggested a review by the Joint Legislative Commission on Governmental Operations. The House-Senate group meets this week. “I think we ought to take it to Gov. Ops., fix it, and make it perfectly clear what the intent was,” Owens said.

That plan might not solve the problem. A legislative staff lawyer warned lawmakers they might need new legislation to change the Medicaid funding system. That would require a special legislative session or action from the new General Assembly that takes office in 2007.

Some lawmakers worry about waiting to deal with their concerns. “Whatever it takes, we need to do it now,” said Rep. Ronnie Sutton, D-Robeson. “When we come back here in late January and February, there’s going to be other agendas that people are pushing. This thing will slide right through the cracks. We need to fix it now.”

Mitch Kokai is associate editor of Carolina Journal.