Raleigh

Last week, the North Carolina Center for Public Policy Research came out with a report finding that Medicaid, the health-insurance program for the poor, is the fastest-growing government program paid for with state tax dollars.

The conclusion hardly shocked anyone who has been watching state budgeting over the years.

More than a decade ago, I recall one state legislator referring to Medicaid as "The Blob" of horror movie fame. The idea was that the program consumed all in its path.

The center's report showed that Medicaid made up about 15 percent of the state's general operating budget last year, or about $3.2 billion. The figure represents an 8 percent increase from the year before.

And that's just the state's portion of the money. The feds provide 65 percent of Medicaid funding.

The report concludes that Medicaid spending will continue to rise over the next two decades as the state's population continues to get older. At least 20 percent of Medicaid money spent in North Carolina goes to the elderly.

Based on the state budget, Medicaid shouldn't increase this year. Legislative budget-writers, even when accounting for federal stimulus money pumped into program, cut the Medicaid budget by $150 million.

That figure is a real, year-over-year reduction. The cut is significantly larger when considering what budget writers refer to as the state's continuation budget - the built-in program increases meant to take into account population increases, increased utilization of services and inflation.

Of course, a budget is just that. It's not actual spending. Right now, state health officials expect Medicaid to exceed its budget by $250 million.

Yet another well-known fact about Medicaid: Controlling costs isn't easy when eligibility is determined by people's individual circumstances. And when the economy goes bad, so do people's circumstances.

The entitlement nature of Medicaid is one of the reasons for the rising costs. The state's aging population is another factor.

That health care inflation is far higher than inflation elsewhere in the economy (that's what that little debate in Washington is really about) is another reason.

But as last year's legislative debate over the state budget showed, the complexity of Medicaid and the causes of the rising costs don't end there.

In response to the state's budget woes, state legislators agreed to cut Medicaid provider rates and take some other commonsense steps to curb costs.

Democrats and Republicans alike, though, balked at other proposals to cut or eliminate services.

While the state has no control over eligibility, it has a lot of control over what services Medicaid provides.

There's a rub, though: Medicaid is a really a mixture of the public and the private. The dollars are public; many of the providers of health care services are private.

Once a service starts, an entire network of private providers springs up. Those providers then become job producers in their communities.

And, directly or indirectly, they become lobbyists, urging legislators to protect them.

Scott Mooneyham writes for Capitol Press Association in Raleigh. Contact him at smooneyh@ncinsider.com.