With election over, SC healthcare debate takes new tone

jholleman@thestate.comNovember 9, 2012 

  • Health care deadlines With the re-election of President Obama, two Affordable Care Act deadline loom. Health insurance exchanges: States must submit their plans by Nov. 16; enrollment begins in October. Medicaid expansion: States must decide in 2013 whether to opt out of expansion starting in 2014.

— The presidential election results ensure the Affordable Care Act has a future, but it’s hard to say exactly what that means in South Carolina, even in the near future.

Decisions on two major issues — regarding health insurance exchanges and the Medicaid expansion — loom in the coming months. The deadline for states to submit their insurance exchange plans to the federal government is Nov. 16, and states are expected early next year to decide whether to opt out of Medicaid expansion in 2014.

Gov. Nikki Haley and state health agency leaders have made it clear, they don’t plan to create a South Carolina-specific health insurance exchange and they want to opt out of Medicaid expansion. The state Legislature is expected to make a decision on expansion in the 2013 session.

In both cases, there are nuances to be worked out in the coming weeks and months.

“Now, instead of having election talk like we have for the past 18 months, we can have actual policy talk,” said Tony Keck, director of the S.C. Department of Health and Human Services.

Provisions expected to start soon could be delayed as members of Congress deal with the looming crises referred to as the fiscal cliff. “Budget pressures will slow the train,” according to Mark Thompson, an assistant professor of political science at USC with an emphasis on health care.

But health insurance exchanges and Medicaid expansion are two trains that have left the station.

Health Insurance Exchanges

In some ways, a health exchange would work like a travel website that searches for the best hotel rates. The concept of a health insurance exchange is to provide access to comparable health insurance plans from multiple companies for individuals who are uninsured, underinsured or in small group policies.

Haley’s administration accepted a federal grant to study the issue, but the study committee decided not to form a state exchange. Keck said the federal guidelines didn’t provide enough details, likening the process to learning to fly a plane before you build it.

A week before the deadline to submit state plans, Keck said, the guidelines remain sketchy.

“Even states who have been taking steps toward exchanges are way behind,” Keck said. “Nobody thinks it’s going to be up and working” by the individual enrollment deadline next October.

Tompkins agreed that nobody is ready to roll, and he expects the Obama administration will relax the deadlines. An analysis by the Kaiser Family Foundation found only 19 states had begun setting up their own exchanges by late September.

South Carolina officials have given no indication they plan to create their own exchange, and if they don’t, the state will have to rely on a federal exchange. That might not be a bad outcome.

“We have to look at what’s likely to be the plan available from the federal government, but we’ll probably be better off” with their plan, said Columbia health care economist Lynn Bailey.

South Carolinians could end up with options, whether from multiple federal plans or some kind of alternative that could be offered by BlueCross BlueShield of South Carolina, which handles more than half of the health insurance market in the state. Also, a coalition of state businesses has been working on a co-op program that’s similar to a health insurance exchange for small businesses, Bailey said.

Medicaid Expansion

The U.S. Supreme Court’s ruling last summer upholding the constitutionality of the Affordable Care Act gave states the ability to opt out of the Medicaid expansion provisions. Starting in 2014, the ACA will add to the Medicaid rolls about 250,000 adults younger than 65 who make up to 138 percent of the federal poverty level: about $15,000 a year for a single adult and about $31,000 for a family of four (though children in that family already are eligible for Medicaid).

Insurance mandates and other aspects of the ACA are likely to prompt another 293,000 — most of whom are Medicaid-eligible now but don’t register for it — to join Medicaid rolls.

The federal government would pay 100 percent of the medical costs of the expansion in the first three years, slowly dropping to 90 percent in 2020.

If South Carolina opts out, about a quarter million people won’t be eligible for Medicaid coverage and must get insurance on their own.

If the state opts in, its annual Medicaid expenses would increase from $1.7 billion this year to $2.55 billion in 2020. The federal Medicaid dollars coming to the state would increase from $3.69 billion this year to $7.14 billion in 2020.

Haley and Keck contend that would be throwing more money at a system that’s inefficient and ineffective.

“We’ve been working on the real issues of health care — improving outcomes and decreasing costs,” Keck said. “Our approach wasn’t going to change much if Romney was elected.”

Some health care leaders in the state disagree with Keck’s stance.

“We do support Medicaid expansion,” said Allan Stalvey, a senior vice president of the S.C. Hospital Association. “It’s the right thing to do. If there are alternatives or if there are different ways to implement the expansion, we’re willing to look at that.”

The health insurance exchanges and Medicaid expansion are important to hospitals. The added expense is expected to be offset in part by reductions in federal payments to hospitals for treating uninsured patients. The theory is there will be fewer of those uninsured, so the payments won’t be as crucial to the hospitals.

Physicians are split on the Medicaid expansion issue. The S.C. Medical Association maintains that health care reform must uphold the traditional patient-physician relationship, promote high-quality health care and, most importantly, be fiscally sound.

Dr. Greg Tarasidis, an ear, nose and throat doctor with a private practice in Greenwood, says even if the federal government pays most of the money in the early years, South Carolina could struggle to pay its share down the road. He suspects the end result will be reductions in reimbursements to physicians for treating Medicaid patients.

“This would lead to fewer doctors providing Medicaid services,” Tarasidis said. “So your ultimate result of expanding health care would lead down the road to nobody to take care of those patients.”

Dr. Bruce Snyder, a vascular surgeon in Greenville, would prefer South Carolina opt in on Medicaid expansion because the alternative is to send taxes to Washington and get nothing in return.

“I struggle a little bit with the concept that here in South Carolina we’re going to be paying tax dollars to the federal government which are going to potentially go to expand health care in California or Florida,” Snyder said.

One of the first health care fallouts of the election might be the sight of more physicians’ white coats on the State House grounds this winter. After holding out to see if Republican nominee Mitt Romney would get a chance to follow through on his pledge to repeal the ACA, the hospital association, the medical association and individual physicians plan to lobby the Legislature on the pros and cons of Medicaid expansion.

Keck will be there often to make his point. He suspects the budget debate in Washington will give him ammunition, since one of the few federal spending areas with potential for major cuts is health care. And one likely move would be to shift those costs to states.

“I think it’s great that states are going to debate this,” Keck said. “I don’t know why anybody in any state would rush in to expansion at the same time the feds are debating how much they’re going to spend.”

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