RALEIGH — Since 2001, North Carolina politicians, state employees, lobbyists, and policy analysts have been debating the causes of our string of budget deficits. The same debate has been going on in most state capitals across the country to a greater or lesser degree (mostly the latter). There are nearly as many explanations for our fiscal woes as they are groups interested in spinning them. Some have more validity than others.
But one argument that I, for one, am tired of hearing goes like this: “Our problem can’t be wasteful spending. If you add up elementary and secondary education, universities, and health care programs, that’s the vast majority of our state General Fund budget right there — and surely you can’t seriously suggest that we not fund those programs!”
Yes, I can. And don’t call me Shirley.
It is fallacious to suggest that if you support the existence of a program, you must blindly support whatever amount of tax money the politicians would like to spend on it. In elementary education, for example, North Carolina spends hundreds of millions of dollars a year placing teacher assistants in classrooms. The best available evidence — including the same study from Tennessee that advocates of smaller class sizes cite as justification for their proposal — suggests that teacher assistants, while possibly making teachers feel a bit less overwhelmed, have no statistically significant impact on student achievement. Spending fewer dollars on teacher assistants would not harm the educational process in any meaningful sense, and I’ve been glad to see some lawmakers warming to the idea of economizing in this area to fund higher-priority needs (I was also appalled to see “conservative” lawmakers resisting the idea during the recently concluded legislative session).
Similarly, to say that every dollar requested by administrators of the North Carolina Medicaid program is a dollar that must be spent, else we end up with a humanitarian crisis worthy of United Nations intervention, is to double a rhetorical bet with a pair of fours and hope no one calls your bluff.
In this case, though, the cards are showing. For one thing, we keep hearing of cases in which North Carolina seems to have significantly overpayed its Medicaid vendors and generally to have managed its program with accounting controls somewhat below those of the average charity fish fry. Most recently, The News & Observer reported that the state might have to repay the federal government as much as a quarter of a billion dollars because of past misuses of a program that reimburses hospitals. The eventual bill may be quite a bit less, but the point is clear: there is something very wrong with our Medicaid program, which is one of the most expensive in our region and has been growing rapidly for years.
State administrators and politicians have advanced a variety of excuses for the Medicaid surge. They are, for the most part, either misplaced or exaggerated. As an invaluable analysis from the American Enterprise Institute reveals, North Carolina and other states expanded Medicaid spending during the 1990s far beyond what was needed to keep up with caseload growth or general medical inflation. Indeed, from 1994 to 2000, only four states in the union had a faster growth rate in state Medicaid spending than North Carolinas’ staggering 62 percent. This couldn’t possibly be due to an increase in the truly needy population for which Medicaid was originally created, since North Carolina’s poverty rate shrank by 15 percent during the same period.
No, there was nothing inevitable in our state’s massive Medicaid expansion. The system wasn’t on autopilot. Its budget wasn’t forced upward by federal mandates, or by general medical inflation (Medicaid spending grew twice as fast as Medicare spending, and far faster than private health-care spending, during this period). Former and current legislators, governors, and state administrators bear the responsibility for creating the Medicaid monster that has already torn up the laboratory and is now rampaging through the countryside.
There was no need for politicians to raise taxes on their citizens in order to finance a bloated and indefensible entitlement program growing at double-digit rates each year. The time for excuses is over. The time has come for leadership.
Hood is president of the John Locke Foundation and publisher of Carolina Journal.