Progressive Voices

Critical Medicaid audit based upon unrealistic demands

Critics of North Carolina’s Medicaid program – the publicly-funded health insurance program for adults and children of low income – made some headlines in recent days by touting a new state audit that supposedly showed a large and previously unreported budget deficit. The critics, who included Governor McCrory and his State Health and Human Services Secretary Aldona Wos, claimed that Medicaid had gone $375 million over budget with state dollars and more than $1 billion over budget when federal dollars are included.

At the Governor’s news conference announcing the audit, DHHS Secretary Wos, lectured the Medicaid section of her agency: “Cost overruns will not be tolerated and will not be acceptable …There’s a budget for a reason.”

Conservatives are also using this audit as a reason for the state not to expand the Medicaid program to cover a half-million uninsured people as made possible by Obamacare (even though the expansion would be financed almost completely by the federal government).

There’s just one problem with McCrory and Wos’ conclusion: It’s bogus.

Like someone demanding blood be squeezed from the proverbial turnip and then professing to be “shocked” when the magic is not performed, the Medicaid “shortfall” is actually the result of absurd and unrealistic demands placed upon the program last year by the General Assembly.

Indeed, as anyone who pays real attention to the Medicaid program could have told the Governor and Secretary Wos last year, the overly-ambitious and ideologically-driven demands imposed by the General Assembly (and passed into law over then-Governor Perdue’s veto) were never realistic. Former Health and Human Services Secretary Lanier Cansler (a one-time Republican lawmaker) made this plain as far back as August of 2011 when he said:

“It’s just really going to be next to impossible to achieve this budget, and I’m not sure where the legislature will go with that. The fact that this budget plays into next year (means next year) is going to be a difficult budget year as well.”

Secretary Cansler reiterated this point in a letter sent directly to Republican General Assembly leaders again on October 27, 2011. According to Cansler:

“…aggressive budget cuts mandated by the General Assembly’s budget are unreasonable and unobtainable.”

Unfortunately, Cansler’s pleas had no effect.

Indeed, despite demanding massive Medicaid cuts, Republican General Assembly members further tied Secretary Cansler’s hands in January 2012 when the prospect of politically harrowing cuts in so-called “optional” services like artificial limbs and ambulance service (as well as major cuts in payments to doctors and hospitals) were on the table. The Legislature simply told Cansler to find other places to close the gap!

But, wait, it gets even more absurd.

Remember the amount in state funding the audit claimed the Medicaid program had exceeded its budget by ($375 million in state funds and $1 billion including federal money)? Here’s an amazing coincidence: Those sums are almost precisely equivalent to program cuts that the General Assembly demanded (but failed to provide the tools to attain) each year!

None of this is to deny the importance of efficiency. In a giant health program like Medicaid, one can and should always look for new ways to make reforms to be more efficient and effective.

But here’s another inconvenient truth for the critics: For the 2007-10 period (the most recent period for which national data are available) North Carolina’s Medicaid program had the lowest rate of spending growth of any Medicaid program in the United States. In fact, North Carolina’s Medicaid program spending growth was about half the national average! Not surprisingly, other states and even private health insurers are actually looking to North Carolina for lessons on how to run their own programs efficiently and effectively.

Got it? Over the last year and a half, in-the-know experts warned state budget-makers (and anyone else who would listen) repeatedly that the Medicaid program would not be able to meet the unrealistic budget set for it by the General Assembly.

For the McCrory Administration and the state auditor to effectively ignore this reality and then express shock and dismay when the program failed to meet such demands is, at best, remarkably disingenuous. At worst, it speaks to intentional misrepresentation of an efficient and effective program that delivers quality health care, garners strong support from the doctors and the hospitals doing the hard work, and makes a huge difference in the lives of over a million of our fellow citizens.

Adam Searing is Director of the Health Access Coalition at the N.C. Justice Center.