SC did not expand Medicaid under Obamacare, but cost and enrollment are growing anyway

Charleston Post and Courier
February 10, 2019

By Jerrel Floyd

South Carolina is one of 14 states that continues to turn down federal money to expand eligibility for the low-income Medicaid program. But an analysis by The Post and Courier found the statewide program has grown substantially in recent years anyway.

Even without Medicaid expansion, South Carolina is expected to spend $7.7 billion to administer the program to more than 1 million people this year. This spending represents a 32 percent budget increase in eight years. During the same time frame, Medicaid enrollment has grown by more than 260,000 people. If Gov. Henry McMaster’s proposed budget for the 2020 fiscal year is approved, state lawmakers, Medicaid spending and enrollment are projected to rise even more.

Some of this growth has been driven by a substantial increase in the number of children enrolled in Medicaid since 2011. Fewer than 500,000 children were covered by Medicaid eight years ago. Today, their enrollment tops 650,000, according to data provided by the S.C. Department of Health and Human Services.

Meanwhile, Medicaid expansion would mostly benefit adults in South Carolina whose income falls below 138 percent of the federal poverty level — about $17,000 a year for a single person. Adults in this group rarely qualify for Medicaid coverage, and there’s no indication state leaders intend to change the existing rules.

In his State of the State address last month, McMaster touched on many aspects of health care in South Carolina, including mental health services, nursing care, telemedicine and the opioid crisis, but did not mention Medicaid.
McMaster spokesman Brian Symmes said in a prepared statement that the governor “is committed to focusing on creating healthcare solutions that are tailored to South Carolinians’ needs rather than committing to irresponsibly spending hundreds of millions of dollars annually that the state simply can’t afford.”

Likewise, South Carolina Medicaid spokeswoman Colleen Mullis said the state Medicaid agency “continues to focus on providing the best health outcomes for our beneficiaries while remaining a good steward of taxpayer dollars.”
But some experts feel declining federal money for Medicaid expansion is a missed opportunity to bring more spending to the state where approximately 540,000 people are uninsured, according to census data. Historically, the federal government has covered about 70 percent of all Medicaid costs in this state. Expansion costs would be covered by the federal government at 90 percent.

“We could use federal dollars to pay for things that are using state dollars,” said Frank Knapp, president and CEO of the S.C. Small Business Chamber of Commerce. “We can afford it (the expansion) and use that (state) money for other things.”

The nonprofit Kaiser Family Foundation estimates at least 92,000 adults would qualify for Medicaid coverage if South Carolina expanded eligibility rules. An analysis prepared by the Moore School of Business at the University of South Carolina in 2012 found that expanding Medicaid in this state would “generate a total net increase in federal funding for the state of approximately $11.2 billion between 2014 and 2020.”

But many conservatives, including McMaster, have argued for years that South Carolina can’t afford the 10 percent match required to finance Medicaid expansion. The cost of Medicaid, they argue, is already too expensive.
Scott Barkowski, a Clemson University professor and health economist, said that argument is somewhat valid. Around a fifth of the state population is covered by Medicaid.

“We already cover a substantial portion of the population,” he said.

But Barkowski also said the potential increase in federal dollars would allow for out-of-state money to come into South Carolina.

“I think it’s clear from an economic perspective, it would make sense to expand because you get all this additional spending coming in from the federal government,” he said. “If people care about the local economy of the state, it should be something that you want to do.”

States that have expanded Medicaid have seen no significant increase in state spending, according to a Health Affairs study, but those states have, on average, observed about a 12 percent increase in federal spending.

Ultimately, it comes down to priorities, Barkowski said. While some see the possibility of introducing more federal spending as a good thing, others argue that the federal money comes from taxpayers and that it’s not their responsibility to fund everyone’s health care.

“It comes down to the eye of the beholder,” he said. “Everyone will value those benefits somewhat differently.”

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