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August 28, 2007

The Medicaid switch

North Carolina legislators have worked out a plan for the state to take over the local share of Medicaid payments. N.C. State University economist Mike Walden explains why this change is important -- and who wins and loses.

"First of all ... Medicaid is the governmental program to help pay the medical costs for low-income people. And it is a rapidly growing program at all levels," explains Dr. Walden, a professor of agricultural and resource economics. "North Carolina has been one of the few states where counties are forced to share in those costs. And the problem for many counties is that we see in low wealth counties -- the poorest counties -- those counties typically have the highest number of clients relative to their population receiving Medicaid. And so the poorest counties have had to be paying the biggest part of their budget for Medicaid, and that obviously inhibits them from doing other things like improving their schools, public safety, et cetera.

"So this has been an issue that has been well known in North Carolina, and finally the General Assembly said we are going to have a plan where we are going to now say to counties, 'You don't have to share in the cost of Medicaid. We are going to take that over, along with the federal government.'

"In exchange the state, though, is taking back one-half percent on the sales tax that counties did have to use," Walden continues.

"Now in terms of winners, clearly low wealth counties are going to win. But some of the high wealth counties -- like Wake and Mecklenburg -- where Medicaid is not so much of an issue, they are probably going to lose because they are going to lose more by seeing that half cent on the sales tax removed."

Posted by deeshore at August 28, 2007 08:00 AM