Gov. Pat McCrory presented his recommended $21.5 billion budget Thursday morning.
Gov. Pat McCrory presented his recommended $21.5 billion budget Thursday morning. Photo credit: Rose Hoban

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<p>Budget season begins with Gov. Pat McCrory’s $21.5 billion proposal.

By Rose Hoban

In the coming year, Gov. Pat McCrory said he would like to spend about $5.3 billion on state health care needs as part of a budget totaling $21.5 billion.

The governor rolled out his budget proposal at the emergency management center on the outskirts of Raleigh Thursday morning, as public safety staff were beginning to prepare for the latest bout of winter weather.

Gov. Pat McCrory presented his recommended $21.5 billion budget Thursday morning. Photo credit: Rose Hoban

In McCrory’s proposal, Medicaid, the biggest portion of the Health and Human Services budget, would increase to $3.795 billion, up from last year’s final Medicaid tab of $3.68 billion in state dollars, reflecting 2.9 percent growth.

This year’s Medicaid budget is about 18 percent of the total state budget.

“People don’t realize how much of our budget goes to education and to health and human services,” said McCrory’s budget director, Lee Roberts. “Twenty-five percent of our budget goes to Health and Human Services and two-thirds of that is Medicaid.”

No Medicaid expansion money

The increase in the Medicaid budget is what’s needed to cover the additional costs of care, forecasted changes in utilization and more patients. Currently, the program covers health care for about 1.8 million low-income children, some of their parents, people with disabilities and poor seniors.

State officials estimate as many as 70,000 people could discover they’re eligible for Medicaid as they attempt to enroll for health insurance coverage under the Affordable Care Act. That’s a big driver for this year’s increase in Medicaid expenditures.

But McCrory did not earmark money in either this year’s or next year’s budget to cover costs of Medicaid expansion, which would add anywhere from 370,000 to 500,000 more people to the rolls.

The governor said there’s still uncertainty about expansion, stemming in part from a legal challenge to the Affordable Care Act that was heard this week in the U.S. Supreme Court. A decision on the case is expected in June.

“We recognize  that the Supreme Court case could have ramifications on everything related to health care, including Medicaid,” he said.

McCrory said he and Department of Health and Human Services Sec. Aldona Wos are looking at what other states have done to “expand insurance for the uninsured,” but he declined to elaborate any specifics.

“We’re looking at [other states’] plans, looking at what waivers were given, looking at what waivers we think we’d need to have a North Carolina plan,” he said.

McCrory also didn’t know where money for the state costs of Medicaid expansion would come from.

Until the end of 2016, the federal government will be paying 100 percent of the costs for new patients eligible for Medicaid coverage under the Affordable Care Act. Federal support will then ratchet down slightly over the following several years; by 2020, the federal government will pay 90 percent of the costs of covering these new recipients.

“Even if we did Medicaid expansion, is there a pot of money that could cover the extra 10 percent?” McCrory asked.

Resolving some longstanding problems

McCrory’s new budget allocates an additional $175 million to cover potential Medicaid overruns, which have plagued the program for the past several years. The proposal suggests the reserve be limited only to allocations needed by DHHS and would require the approval of the state budget director to use the money, thus shielding it from being used by lawmakers for other purposes.

State Budget Director Lee Roberts outlines Gov. Pat McCrory’s health and human services budget. This is Roberts’ first state budget. Photo credit: Rose Hoban

Adoption of McCrory’s budget would be good news for the state Medical Examiner’s Office and the state’s system of county medical examiners, which has been the target of a series of scathing articles in the Charlotte Observer over past months on shortcomings in the system.

The governor calls for almost $5 million over two years to create 14 new “medicolegal death investigators” who would be deployed statewide to look into suspicious deaths. Some money would also go to provide better training for county medical examiners and transportation costs to get bodies to regional autopsy centers.

Additional money for the CME’s office will come from fee increases for doing those autopsies.

McCrory also called for close to $2 million to cover the costs of transitioning North Carolina from paper death certificates to an electronic system for death records.

Delays in issuing paper death certificates is something that House Speaker Tim Moore (R-King’s Mountain) has said was a problem in his own legal practice. He said he would support efforts to computerize the system.

Another part of state government that would get a boost from McCrory’s budget is the foster care system, which would see $12 million in new money over a two-year period go to payments to foster care families to cover the cost of care. Close to $3 million in additional state money would go to help more foster children get adopted.

But allocations for many programs remained about the same, such as money for the state’s Pre-K program.

“Gov. McCrory understands the importance of early care and education; that is clear in his support for Smart Start, NC Pre-K and child-care subsidies,” said Cindy Watkins, president of the North Carolina Partnership for Children.

Expenditures for early-childhood education grew by $5 million last year in non-recurring dollars; some of the money came from lottery receipts and some from new state dollars. Most of that money was used to increase the number of Pre-K slots and cover increases in teacher pay. This year’s budget takes that non-recurring budget item and makes it recurring, meaning it would become a permanent part of the budget.

Another $17 million in money for the Pre-K program would come from the federal Temporary Assistance for Needy Families replacing state dollars. The total amounts will remain the same, but fewer state dollars will be spent.

“My hope is that as North Carolina’s economy grows, we will continue to see increases in the state’s investment in the first 2,000 days of a child’s life,” Watkins said.

Mental health funds

McCrory proposed adding behavioral health treatment units at eight of the state’s high-security prisons at a price tag of $17.8 million over two years; he also called for money to staff existing mental health beds at the health care facility at Central Prison in Raleigh.

The budget proposal also provides $16.6 million to staff the new Broughton Hospital, due to open later this year, and calls for $10.1 million to pay for mental health care in community hospitals around the state. There’s also $2.8 million to fund mental health crisis beds and create a centralized registry of available psychiatric hospital beds.

“We are pleased to see the diversity of types of mental health proposals to be funded by the governor’s budget,” said Jack Register, executive director of the North Carolina chapter of the National Alliance on Mental Illness.

But McCrory’s budget document notes that once the sale of the Dorothea Dix Hospital property in Raleigh is completed, proceeds from the transaction would cover some of those mental health expenditures.

That language raised some hackles.

“As of now, we remain hopeful that Dix money will only enhance the current budgeted appropriations for existing services or in the creation of new services,” Register said. He said he’s looking for clarification on that language from state budget writers.

When the Dix property deal was first announced in late January, Register released a statement calling for “strong controls” to be placed on the use of the money from the sale.

“It should not supplant existing expenditures, and the Governor must ensure accountability for every penny to be used for new functions related to mental health,” Register wrote at the time.

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