House Members Criticize Health Insurance Budget

RALEIGH, N.C. -- Criticized by Republicans, Gov. Mike Easley and advocates for the poor, the nearly $17 billion budget passed Thursday by the Senate is already taking shots from the House.



House budget writers, who now must craft a competing spending bill, say they are particularly worried about Medicaid reductions that could leave thousands without health insurance.



"I'm gravely concerned about a lot of things in the Senate budget," said Rep. Wilma Sherrill, R-Buncombe, one of the chief House budget writers. "The overriding concern is helping those that need the help. I think we've got a long time ahead of us."



House members are also upset with the Senate's proposed cuts to courts that help drug offenders and families, language that could rupture the fragile coalition that passed a lottery in the House, and changes to the state's taxes they deem unfair to low- and middle-income residents.



A two-year budget is supposed to be on Easley's desk for his signature before July 1, but some worry the disputes will force negotiations deep into the summer.



Senate Democrats, who pushed their budget through the chamber with a 28-20 party-line vote Thursday, responded that their spending plan is much better than critics are making it out to be.



The budget eliminated a potential $1.3 billion shortfall in the next fiscal year, boosts education spending, reduces the growth of health care costs and makes North Carolina more attractive to businesses on taxation matters compared with other Southeastern states, they said.



"We still need jobs in North Carolina," said Sen. Walter Dalton, D-Rutherford, a Senate budget writer. "You can't pay taxes and buy products unless you have a job."



The Senate Democrats proposed more than $750 million in new or extended taxes -- including making permanent a half-cent sales tax increase -- as well as another $180 million in higher fees. But those increases, along with the proposal to lower corporate and individual income tax rates, left many House Democrats arguing that lower and middle-income residents are getting the short end of the stick.



"The problem with the revenue package is that it provides tax relief to those who need it least," said Rep. Paul Luebke, D-Durham, a co-chairman of the House Finance Committee. "If anybody needs tax relief, it's the 8 million North Carolinians who pay sales tax."



In their budget, Senate Democrats reduced the growth of Medicaid, the government health program for low-income children, elderly and the disabled, by $127 million more than Easley recommended in his spending proposal.



"Many of the complaints that have been filed against us by business and industry and other folks is that we're too generous in Medicaid, and it's been very, very costly," said Senate leader Marc Basnight, D-Dare.



Hospital rates were frozen and personal care services for stay-at-home invalids were made more restrictive, and North Carolina's reimbursement rate for doctors was dropped to 90 percent. While that's still the highest in the Southeast, Rep. Edd Nye, D-Bladen, said the change could reduce the rolls of doctors who will see low-income residents.



"That cut would be devastating because people ... have been trying to encourage them to see Medicaid patients for years," Nye said.



The changes would shift 57,000 people with dual-eligibility for Medicaid and Medicare to Medicare-only coverage, while an estimated 8,000 others will lose their coverage entirely because they make too much money, saving $53 million.



They'll have to incur $3,000 in medical expenses over a six-month period in order to qualify for Medicaid again, said Mark Benton, the interim director of the state Division of Medical Assistance.



"It's going to be difficult for them," Benton said. The Senate budget sets aside $5 million to help fill the prescriptions drug and other medical needs of those who lose coverage.



Several House members also said they don't like the budget provisions that could alter a stand-alone lottery bill that narrowly passed the House last month, Luebke said.



Rep. Deborah Ross, D-Wake, said the Senate budget takes out two things that had persuaded her to vote for a lottery -- an advertising ban and using profits for need-based college scholarships.



The Senate's lottery committee scheduled a meeting for next Wednesday to take up the issue. Any alternative to the House's lottery format could break the fragile coalition that passed it 61-59.



"It's dead in the water if it stays in the budget," Sherrill said.