Let me warn you right at the start: this column contains some homework assignments.

North Carolina’s state budget is in sorry shape. The fiscal year that begins in July will start out with more than a $1 billion more in anticipated spending than the current revenue stream is likely to supply. Most of that is squarely the fault of the state legislature and Gov. Mike Easley, who agreed to “balance” last year’s budget with some $850 million in one-time revenues and fund shifts rather than making permanent, structural changes in state government.

All they did, in other words, is kick the can down the road a piece. It’s still there. Now, with the 2002 elections behind us, tough decisions are coming.

Many of them will have to be about Medicaid, the joint state-federal program that supplies medical care to poor people, some nonpoor children and pregnant women, the disabled, and elderly patients in long-term care. The program is growing at an unsustainable rate. Reportedly, some $350 million in new spending in FY 2003-04 will be attributable to Medicaid growth alone. According to an AP story linked at Carolina Journal Online yesterday, most states in the nation are eyeing Medicaid savings as a way of coping with budget deficits. North Carolina made some strides in that direction last year, but not nearly enough.

Every interest group involved knows that a fight is coming. The Easley administration is preparing its budget plan, and will expect to get hit from all sides (that’s a safe bet). State legislators who are on the ball are reading up on the program, looking at historical tables, and asking staff to gather data. Provider groups, such as hospitals and physicians, are bracing themselves for another round of attempted cuts in their reimbursements. Pharmaceutical companies know that politicians and left-wing activists have painted a big yellow-and-black target on their backs.

You need to get ready for the coming debate, too. Here are a few suggestions:

  • My friend Jim Frogue of the American Legislative Exchange Council in Washington specializes in health care policy. He has just written a primer on Medicaid for the Heritage Foundation, which you can read here:
  • The National Center for Policy Analysis in Dallas is an excellent, pro-market source of information on health care issues. The Medicaid section of its web site is a good place to get background information and reform ideas.
  • The John Locke Foundation has published several papers on Medicaid policy in North Carolina. Two recommendations would be the Medicaid section of our 2002 briefing book and a Spotlight paper by yours truly proposing some “triage” for the state Medicaid program.

Read carefully, as you will be tested on this material when the state legislature returns to Raleigh. Chances are, lawmakers will come prepared to do something about Medicaid, for good or for ill.

Hood is president of the John Locke Foundation and publisher of Carolina Journal.