Tuesday, November 30, 2010

Medicaid services on chopping block in Columbia

Cash-strapped agency gets final look from Sanford

Posted by Greg Hambrick on Tue, Nov 30, 2010 at 2:45 PM

When politicians talk about Social Security or Medicare, it's a "promise" we have to keep for our seniors. On the other hand, politicians keep Medicaid sharply in the "burden" pile.

South Carolina's Department of Health and Human Services, which administers the state's Medicaid spending, has warned state budget writers that it will have to operate in a $228 million deficit for the rest of the budget year, or stop paying doctors in March. A report last month noted, "providers will be encouraged to continue seeing Medicaid patients in hopes that they will eventually be paid."

The department's problem is the result of open enrollment with few restrictions, adding 100,000 in the past three years of economic turmoil. DHHS notes that lawmakers have raided $550 million in agency reserve funds to cover other state shortfalls and has prevented a reduction in reimbursement rates to doctors.

Senate leader Glenn McConnell (R-S.C.) had an easy answer for the Associated Press: Let the well run dry. His logic is that it can't be as bad as DHHS suggests.

"They're always going to give the worst-case scenario," he said. "This is going to spread like fire on gasoline if these agencies just think they can parade into the Budget and Control Board and get additional money."

During the campaign, then-candidate Nikki Haley vaguely suggested reforms for the Medicaid program to address abuse, otherwise known as the low-hanging fruit of any reform. "We need to take abuses out of the system so people who deserve benefits get those benefits and those that are abusing the system no longer get it," she told The Post and Courier. If you were looking for tough decisions post election, keep looking.

But Texas Gov. Rick Perry is far more resolute, suggesting his state exit the federal Medicaid program and offer a more limited benefits plan. The proposal has gotten some interest from other states, including South Carolina, but it has largely been panned by, well, people who are equally worried about budgets and indigent care.

The Wall Street Journal notes federal government, on average, covers 57 percent of the cost of the program for states. In a guest column in The State, S.C. Hospital Association CEO Thornton Kirby notes South Carolina receives three federal dollars for every one state dollar. "Said another way, state taxes have to cover only one-fourth of the cost of caring for people who qualify for Medicaid," wrote Kirby. "That's not just a good deal, it's a great deal." In fact, the state's share per eligible recipient has gone down over the last three years from $1,225 per person to $952 per person, according to DHHS. We're paying less per person, but there are just more of them.

The DHHS says exiting the federal program would mean a $4 billion cut in medical spending in the state. Most of the 975,000 South Carolinians currently served by Medicaid would also go without medical care or fill emergency rooms and drive up the costs of everyone else's health insurance to make up the difference for hospitals and doctors.

As Kirby noted, this option is "long on personal accountability, but short on compassion."

Meanwhile, a frequent argument from Perry, Haley, Cong.-elect Tim Scott and others is that if the natural increase in enrollment won't cripple these programs, federal healthcare reform will. But Edwin Park, Co-Director of Health Policy at the Center on Budget and Policy Priorities, says the Fed is picking up 96 percent of the cost in the first decade. "The expansion will add just 1.25 percent to what states were already projected to spend on Medicaid over that period in the absence of health reform," he says.

Recognizing the mounting costs, DHHS asked for recommendations online for cost-cutting measures. More than 700 ideas included improved screening for eligibility and weeding out fraud (hat-tip to Haley). Others suggested increasing co-pays and reducing some services, which DHHS says it will do to the maximum allowed by Washington.

In two weeks, the state's Budget and Control Board, chaired by Gov. Mark Sanford, will likely decide to support the department by suggesting the kind of targeted cuts DHHS has already enumerated. From there, it's up to the legislature and Gov.-elect Haley.



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