Two years ago Carolina Journal reported that Gov. Mike Easley, as part of a plan to overcome North Carolina’s $1.17 billion budget deficit, withheld $209 million in various taxes that the state collected for counties and municipalities.

At the time most local government leaders and managers thought Easley kept money that didn’t belong to the state.

“It’s our money,” Charlotte Mayor Pat McCrory told reporters. “It’s the cities’ money.”

But most county officials also believed the General Assembly needed to change the way North Carolina administered Medicaid. Now the federal government has provided some relief to state governments, but only for the fiscal year that ends on June 30, 2004.

North Carolina and New York are the only states that pass a significant portion of Medicaid costs on to counties. The federal government this year will pay almost 66 percent of Medicaid costs in North Carolina. The remainder of the bill goes to the state, which in turn passes 15 percent of its costs to the counties. The portion of total costs counties pay is 5.4 percent.

That may not seem overly onerous, but in its March 2002 issue CJ reported that the state’s 22 poorest counties suffer an inordinate share of the burden. Those counties carried up to one-third of their populations on the Medicaid rolls, and allocated as much as 14 percent of their entire budgets for the program.

According to the North Carolina Association of County Commissioners, most of those counties have seen their enrollments and expenditures grow since then.

“If the state is serious about having ‘one North Carolina,’” said Bertie County Manager Zee Lamb at the time, “then that [Medicaid] policy is bad. It’s disproportionately adverse to the poorest counties.”

Medicaid enrollees accounted for 34 percent of Bertie’s population in 2003; 36 percent of Martin County’s residents are in the program.

As for total allocations, Hertford County must use 15.6 percent of its budget for Medicaid costs. Swain County set aside 14.8 percent for the entitlement.

In addition, North Carolina is only one of four states that requires its counties to foot 100 percent of nonfederal administrative costs associated with Medicaid. County social services employees determine eligibility.

“I think it’s fair to say that North Carolina counties are among those that are responsible for the highest costs for Medicaid,” said Marilee Sanz, associate legislative director for the National Association of Counties.

Counties complain because the state charges them, but they have no decision- making responsibility over eligibility or costs.

“There’s very little [they] can do to reign in cost containment,” said Rebecca Troutman, director of research for the N.C. Association of County Commissioners.

Worse for poor counties is that a higher percentage of their residents are eligible for Medicaid, resulting in larger percentages of their budgets paying for the insurance plan.

“How much is left over for schools?” Troutman asked. “It’s becoming such a crisis situation.”

Robeson County, according to NCACC, requires 28 cents of its property tax rate to pay for Medicaid; Hertford County needs 22 cents, down from 26 cents two years ago. Seventeen counties spend at least 15 cents of their property tax rate on Medicaid.

“When it costs… Wake County two cents [for Medicaid],” said Hertford County Manager Donald Craft, “you can see how a wealthy county can grow exponentially greater than we can. The way Medicaid is set up penalizes counties like ours.”

The NCACC wants the federal government to make permanent the Medicaid relief it provided for 2004, calling it its “No. 1 goal.”

“We’re mandated with expenditures,” said Billy Joe Farmer, administrator for Columbus County. “It’s too easy when you’re insulated at the federal and state level to push it down to the local level.”

Chesser is an associate editor at Carolina Journal.