Medicaid Reform in Trouble in NC Senate

The problem may be too much of a good thing. The House had a plan to cap counties' contributions to medicaid and to appropriate millions of dollars to provide targeted relief to some counties, and eventually to phase out county contributions. (Details of that plan are here). Now Senate Majority Leader Tony Rand has added a provision that has split the North Carolina Association of County Commissioners and made passage seem like something less than a sure thing.

Rand wants to fix the county contribution system once and for all. (Background: North Carolina is the only state that makes counties pay for Medicaid.) The state gives counties 2.5 cents of the state sales tax. Rand would withhold one of those cents and put an immediate stop to county contributions. That would raise about $1 billion per year, which would more than replace the county contributions, at least for the next ten years. The counties, in turn, would be free to raise the sales tax within their borders by a up to a cent.

Where this goes from here is unclear. What, dear reader, do you think? On the one hand, ending the county-pays system right now and for ever seems like a good idea to me. On the other hand, this is pretty obviously a tax increase. That is, if the counties are losing in sales tax more than what they were paying in Medicaid, they can either raise taxes or reduce services locally. Then again, we're headed toward a serious Medicaid crunch anyway, so why not take some of our medicine now? Thoughts?