Published on July 7, 2012
The Greenville News
By Tim Smith, Staff Writer
COLUMBIA — When Gov. Nikki Haley announced that she opposes implementing insurance exchanges or expanding Medicaid rolls under the new federal health-care law, it came as little surprise to supporters of the act.
The governor has repeatedly criticized it and said it will kill jobs and in effect increase taxes because of its mandate that individuals acquire health insurance.
And she said that her administration is pursuing more cost-effective strategies to help people.
Those who believe the law is needed in the state said the governor reacted too quickly to score political points and that many of the state’s poor would suffer if her opposition blocks expanded Medicaid coverage.
“While the state’s leadership steadfastly rejects the Affordable Care Act that makes quality, affordable health care possible for all its citizens, they have made no attempt to offer another solution,” U.S. Rep. Jim Clyburn told GreenvilleOnline.com.
“The health and financial security of over 700,000 South Carolinians hang in the balance, and they don’t seem to care.”
Others back Haley’s position but wonder about its consequences down the road for states that opt out of some of the law’s provisions.
“We’re walking somewhat in the dark here,” said Sen. David Thomas, a Fountain Inn Republican who chairs the Senate Banking and Insurance Committee.
Haley is not alone. Other governors, including those in Florida and Louisiana, say they oppose the law and implementation of the insurance exchanges or Medicaid expansion.
U.S. Sen. Jim DeMint of South Carolina has called for governors across the nation to refuse to implement it in the wake of a U.S. Supreme Court ruling that upheld the law’s constitutionality.
After DeMint called for governors to oppose implementation, Haley released a statement opposing implementing the insurance exchanges and Medicaid expansion.
“By refusing to implement state-based exchanges, the state is ceding nothing — we were given very little in the first place and, unsurprisingly, asked to give far too much in return,” Haley said in a letter to DeMint.
She said critics sometimes forget that states are given a choice. And without significant participation by states, said the governor, it’s unlikely that any insurance exchange solution can be implemented.
The federal health-care law, which takes effect in January 2014, seeks to expand the number of people covered by Medicaid, provides subsidies for private insurance coverage, including tax credits for small businesses, creates health insurance “exchanges” as a means of offering health insurance choices to the uninsured, adds requirements for employers and the insurance industry and requires individuals to acquire health insurance.
The Kaiser Family Foundation estimated in 2010 that if the law were fully implemented in South Carolina, the number of uninsured would be reduced by 56 percent.
The federal government picks up the entire cost of expanding Medicaid the first year and then pays for 90 percent thereafter. The cost between 2014 and 2019 would be $470 million to the state, about $11 billion to the federal government, according to Kaiser.
Tony Keck, director of the state agency that administers the state’s Medicaid program, said “the last thing we want to do is simply pour more money in a system that is not working right now.”
Keck added that the law “does not tackle the real problems that every American is facing — that health care is just too expensive.”
He said the new law doesn’t get at the root causes for the high expense of medical care and those issues need to be addressed first “so we can get more coverage to more people.”
Keck and Haley wrote that the state is pursuing programs to make improvements — including investments in primary care and patient-centered medical homes, serving more individuals living with disabilities in their homes rather than institutions, and focusing on key health problems like infant mortality.
They wrote that they’re also working to reduce Medicaid administrative costs, encouraging payment reform, and holding Medicaid health plans and providers more accountable for performance.
He said the governor placed money in the budget to improve efforts at finding and enrolling 70,000 children in Medicaid that lawmakers decided last year to cover but who had not yet been enrolled. The state needs to successfully implement that and other needs before agreeing to serve another population, Keck said.
Some Democrats and others are more skeptical about Haley’s arguments and believe she voiced her opposition without all the facts needed to support it.
“I think that’s short-sighted to come out on the heels of the Supreme Court’s ruling without knowing all of the possible ramifications,” said Sen. Brad Hutto, an Orangeburg Democrat. “I think it’s just an off-handed, flippant, political response.”
Hutto said it’s possible that in the end the new law might not be a good deal for the state.
“But maybe it is and maybe part of it is and part of it is not,” he said. “She’s just playing politics with this without taking into account what’s best for the medical needs for the citizens of this state.”
Sue Berkowitz, director of the South Carolina Appleseed Legal Justice Center, which advocates for low-income residents, said not expanding Medicaid would hurt the “poorest of the poor, in our state, the working poor.”
“By expanding the Medicaid program, we can get health care to people who otherwise would have no ability to purchase it, even through the exchanges, due to lack of resources,” she said. “I think it’s short-sighted and not in South Carolina’s best interest.”
Berkowitz argues that there is evidence that the new law won’t cost the state a large amount in the long run.
“For South Carolina, it’s actually a great deal,” she said. “Because ultimately for every nickle we put up, we’ll be drawing down 95 cents from the federal government that will get spent in our economy on health care. It has a great multiplier effect. So for every dollar we spend, it goes through the economy 3.5 times. Really, it’s a job enhancer.”
Allan Stalvey, executive vice president of the South Carolina Hospital Association, an organization that represents more than 60 acute-care hospitals in the state, said the hospitals are facing a double-whammy if Haley gets her wish.
He said not only do hospitals pay for the care of the poor who can’t afford treatment elsewhere but under the new law, payments to hospitals to compensate them for that care will be reduced.
“Hopefully, we’ll address the uninsured,” he said. “Hopefully, the state will take a good, close look at it and come up with a way to take advantage of the federal money. If we don’t do it, the other states will get the money. It doesn’t make much sense for South Carolina to turn down one of the most favorable matches for Medicaid in the country. Somebody’s going to have to pay for health care for these individuals.”
Frank Knapp, president and chief executive officer of the South Carolina Small Business Chamber of Commerce, said he was not surprised that Haley said the state would not implement state-based insurance exchanges. He said she had long ago signaled her opposition to the state creating such exchanges and the federal government will coordinate that if the state does not.
He thinks Haley and Keck should have done more research on Medicaid expansion before announcing their opposition.
Fewer people with health insurance drives up health insurance costs, he said, because those paying for insurance now subsidize through their premiums those who do not.
Small businesses would also benefit from Medicaid expansion, he said. Business owners would be offered tax credits of up to 50 percent of their premium cost for insuring employees. And if Medicaid expands, some of the working poor will be covered under Medicaid, removing the responsibility from the business owners.
“It’s simply math,” he said. “By not expanding it, she’s really hurting the small businesses of this state.”
Clyburn said he was not surprised at Haley’s decision to reject a state-based insurance exchange.
“The federal government will create the exchange for South Carolinians,” said Clyburn, “which is exactly what our officials have been railing against.”
Thomas said officials need to balance what may happen with a program operated by the federal government versus one run by the state.
Thomas said insurance providers will be pressuring officials to create a state plan but they may administer such a plan even if it is operated by the federal government.
“I think the first instinct of a lot of conservative states is to do what the governor has done and I have said we should do, and that’s resist implementation until everything is laid out,” he said. “This is very complicated and it’s going to occupy a lot of brain power and time next year trying to figure this out.”
Keck said Haley and he believe it doesn’t make sense for the state to get involved in the insurance exchanges because they are largely a federal program to distribute the insurance premium subsidies under Internal Revenue Service rules.
He said the Medicaid program has many problems, including the fact that it does not improve the state’s health as much as it should, and the state’s resources should be devoted to those issues instead of being spent on a federal insurance program.
He said the program does not offer states much flexibility if they run them, making it less attractive for states to want to do so.