McCrory struggles with $250 million Medicaid deficit he inherited from Perdue | Eastern North Carolina Now

    Publisher's Note: This article originally appeared in the Beaufort Observer.

    Imagine this: Governor Pat McCrory issues orders to all of the local school systems in the state to insure that by year's end every child will be performing where they should be performing in math, science and reading and to do whatever it takes to see that this happens. The school superintendents can purchase whatever they need, from whomever they need, at whatever cost they must pay and the state will pay the bill. School principals need not hire teachers at the state salary if they need to pay more to get the teachers they need. They need not buy materials from the lowest bidder or from an approved vendors list. They must get what these children need to help them learn.

    The Governor justifies this mandate by saying: Our children are our most important resource and the future of our state. While not every child can perform as well as all other children, every child can perform at the maximum level they are capable of. It is the schools' job to see that each child performs at that level. Whatever it takes. The other agencies in state government will simply have to cut their spending to make up for whatever deficit the school systems generate.

    How many people do you think would think the Governor had lost his mind? We would dare say that most reasonable people, liberal, moderate, conservative or whatever would say: "you can't just mandate 'do whatever needs to be done' and we'll find the money to pay the bill later." Likewise, we can't imagine a company in the state saying to its managers: You must increase sales by X% and you must do whatever you need to do to achieve that increase, no matter what it costs. And we don't know many people who would operate their household budgets that way.

    But that is essentially how the state operates its Medicaid program.

    Now are you ready for the "news"? The state's Medicaid program is running $250 million over budget.

    Medicaid, if you don't know, is the program that provides health care services to poor people. But it does not prescribe how much Medicaid recipients may spend on health care. And while it attempts to restrict how much doctors, hospitals and health care providers charge for a long list of procedures, it does not limit what procedures are provided for each patient. But above all else, the patients do not have to pay a significant share of the costs.

    Some people say that Medicaid recipients get more care than people who pay significant "co-pays" and deductibles while carrying health insurance that costs them or their employers more, quite often, than they pay for housing and food each month.

    Is it any wonder that Medicaid has budget overruns every year? Is it any wonder that we hear reports that health care providers overbill Medicaid? Is it any wonder that we are constantly hearing stories of Medicaid recipients seeking treatment that many of the rest of us don't because we can't afford them?

    Governor McCrory did not create this problem. It has been there for years. If you're looking for who's to blame, look to Washington, DC. But Governor McCrory and the taxpayers of this state, along with all of the other state agencies, are having to bear the burden of the Medicaid cost overruns.

    The Governor has ordered all state agencies to cut their spending to make up as much of the $250 million deficit as possible before the fiscal year ends June 30.

    But what you should know is that the other state agencies have gotten used to this game. They have inflated their budgets knowing that they will be forced to rescind part of their budget. It happens every year.


    This is a foolish game that is being played. Medicaid costs will always be over budget as long as there is no incentive for the patients and their guardian to curtail costs. Anything that is "free" is consumed more than if the consumer has to pay a significant part of the cost or has no incentive to hold down consumption.

    One obvious way to hold Medicaid costs down is to approve fewer people as eligible for participation in the program. Another is to restrict the kinds of services that Medicaid will pay. And yet another way is to require participants to pay a part of the costs themselves.

    But some argue that Medicaid participants are poor and they can't afford to pay part of their health care costs. We don't deny that. But the same is true for most of us. Few of us can afford everything we would like to have...of health care or anything else.

    But common sense tells us that this problem is never going to be solved until the participants in Medicaid have incentives to curtail expenses.

    One incentive some have suggested is to tax Medicaid benefits as income. The more you receive the more you have to pay in taxes, taken out of your paycheck (or benefits check) going forward.

    We would suggest the state try a reward program. Put a certain amount of money, based on previous medical expenses, in a individual savings account for each Medicaid recipient. If at the end of the year, or every quarter, if they have spent a prescribed amount less for Medicaid services, they get the money in the savings account.

    We will never get a handle on this problem until every Medicaid recipient decides that when they go to the doctor that it will, in one way or another, cost them a significant amount. When the doctor discusses treatment they will be in a position that they have some "skin in the game" in those decisions.

    Until we remove the incentive to consume as much as you want, without any real cost to the consumer, Medicaid will grow beyond control.

    We would not allow schools a blank check to spend as much as they feel they need. Why do we treat Medicaid recipients differently?
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