Scoppe: Let’s debate how, not whether, to expand Medicaid

Associate EditorJuly 11, 2012 

FROM THE RIGHT, the idea of expanding Medicaid by a third to cover more of the working poor is throwing money down a rat hole. Even if they think the government should help the working poor, a lot of libertarians and other Republicans see this as an insufferably inefficient way to do it.

From the left, the idea of rejecting such a huge federal match — for every $1 we spend, the federal government sends $9 to South Carolina to pay doctors, hospitals and other providers — amounts to fiscal malpractice. Even if they don’t care a whit about the poor, Democrats, and a number of medical providers, see a massive Medicaid expansion as an economic boon to a state with such a huge portion of the population who would be eligible for the coverage.

As is so often the case, the choices we face in the wake of the U.S. Supreme Court ruling that made Medicaid expansion a state-by-state option rather than a national requirement are not so simple or stark.

I remain convinced that it would be a huge mistake for our state to close the door on the Medicaid expansion, as Gov. Nikki Haley has called for. At the same time, though, it’s not clear that we should automatically agree to the entire expansion that the Congress envisioned. And as the governor’s Medicaid director, Tony Keck, told me last week, it’s even less clear that those are our only options.

“All of this is and always has been, from the start of the (Medicaid) program, one big negotiation between the feds and the states,” he said. “And I think what you’re going to see happen is, my opinion, you’re going to have every state, whether they’re blue or red, go into a negotiation with the feds to try to get the best deal they can.”

And that potential flexibility just might hold the key to reconciling the budgetary concerns of Mr. Keck and Ms. Haley with the desire many of us have to provide better and more cost-efficient care to people who can’t afford it — and whose care we will pay for one way or the other as long as federal law requires hospitals to care for anyone who walks through their doors.

For instance, the Congress intended to make states cover everyone who makes up to 138 percent of the federal poverty rate (that’s the part the court made optional). But it also provided subsidies to help people purchase insurance if their income exceeds the poverty line. That is, it offered two routes for subsidized coverage for people who make between 100 percent and 138 percent of the poverty level, which for a family of four is $23,050 per year.

Those subsidies are “very, very generous” on the low end of the income scale, so Mr. Keck predicts that a lot of states will offer to expand Medicaid to cover everyone up to 100 percent of poverty, if the federal government agrees to provide the same 9-to-1 match. Clearly, that’s something our state ought to consider.

South Carolina currently provides Medicaid to parents who make up to 50 percent of poverty, pregnant women who make up to 185 percent and children whose parents make up to 200 percent. The Affordable Care Act/ObamaCare sought to make states cover all adults who make up to 138 percent of poverty, and promised to cover 100 percent of the cost of that expansion and of increased enrollment in the current Medicaid program for the first two years, before gradually increasing the states’ share to 10 percent. The court made the expansion optional, while upholding the mandate that everyone have health insurance.

I’ll explore the cost projections in much greater detail on Thursday, so for now let’s stick with the basics: South Carolina will spend $1.9 billion on Medicaid this year, with the federal government picking up another $4.1 billion. (By comparison, this year’s budget allocates $2.8 billion in state funds for public education.) Without the federal law, our state’s Medicaid bill would rise to $2.3 billion in 2020; if the federal law were fully implemented, our cost would rise to $2.6 billion, and the federal government’s share to $7.1 billion.

Mr. Keck acknowledges that a 9-to-1 federal match sounds like a great deal, but he argues that “it’s only a good deal if what you’re getting works and if you can’t spend the money somewhere else more effectively.”

He contends that Medicaid is horribly inefficient, and I agree that some of the rules are just crazy. But like his counterparts in other states, Mr. Keck has been able to get federal waivers to operate our state program more efficiently. And there’s no reason to think he can’t continue to do so. So his own efficiency dilutes his inefficiency argument.

The question of whether the money could better be spent elsewhere can’t be as easily dismissed.

A state budget analyst has been telling me for years that we’re approaching the point where the big conflict in state governments would be between public education and public health, as parents who want more spent on the schools clash with older people and their children who want more spent for nursing home care. The federal health law kicks that conflict up several notches, by forcing Medicaid spending to rise even faster — even if we don’t agree to expand eligibility. Which takes us back to Mr. Keck’s argument.

“If you take it to its logical extreme,” Mr. Keck said, “if you were making public policy decisions based only on the match, we should create a $100 billion Medicaid program and take the money from education and infrastructure and everything else.” Looked at from the opposite perspective, he notes that with just 1 percent of the money our state spends on Medicaid, “we could have funded 4K for every kid in the state.”

That’s a good point — up to a point. And that point is this: The comparison is between the non-Medicaid program we could purchase for $1 and the Medicaid program we could purchase for $10.

Unlike his boss, who has made opposition to the Affordable Care Act central to her political persona, Mr. Keck talks a lot about the need for a thorough debate culminating in a legislative decision about where best to spend our state’s limited resources.

“Some may say the ACA, some may say tax relief, and lots of things in between, as opposed to making health-care spending the Number One priority in the state for the next forty years,” he said. “There are some great arguments on both sides, but I don’t think the answer is as obvious as it might seem.”

That makes this very much like the vast majority of choices that face our lawmakers. What would be different — refreshingly different — is if they would act in a way that acknowledges this.

Reach Ms. Scoppe at (803) 771-8571 or cscoppe@thestate.com.

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