COLUMBIA — Imagine someone offered to give you $4.1 billion over three years, and if you did not take it, your neighbors would get the money instead.
That is the situation South Carolina is in with the federal government, according to S.C. House Democrats who are pushing for the state to expand Medicaid – the joint federal-state health insurance program for the poor and disabled.
The money is not really free, Republicans counter. After three years, South Carolina would have to start paying part of the cost of expanding Medicaid – anywhere from $613 million to $1.9 billion by 2020 – depending on a number of variables.
That’s why Monday, the day that the S.C. House begins debating the state’s $22.7 billion budget, Democratic lawmakers are going to propose an amendment that would accept federal money for the first three years of the Medicaid expansion – when the feds would pay 100 percent of the cost – and, then, automatically end the expanded program.
After that date, the only way the expanded Medicaid program would continue in South Carolina would be if lawmakers voted to accept it again, with the state picking up part – 10 percent of its continued cost.
Expanding Medicaid would make up to 500,000 poor people in South Carolina eligible for free health insurance. Researchers at the University of South Carolina estimate that $11.2 billion in added federal spending as part of the Medicaid expansion would result in 44,000 new jobs for the state by 2020.
Republicans are quick to criticize the USC study, noting it was paid for by the S.C. Hospital Association, which supports the expansion. They also say the expansion would cost the state $25 million a year in administrative costs during the first three “free” years.
But Democrats say their plan is the responsible way to expand Medicaid: try it for free for three years. If expansion doesn’t work out, carrying the benefits that USC and others promise, then stop.
But Republicans ask: What happens if expanding Medicaid doesn’t work out? Can the state then just take away health insurance from up to 500,000 people?
‘Hopefully, she gets in line’
While Democrats are the state’s minority party, not controlling either house of the General Assembly or the Governor’s Mansion, they have reason to be believe they can win a fight over Medicaid expansion.
Their cause has powerful allies – in the hospitals – and stands to add more, including business interests.
Last week, for example, the Charleston Chamber of Commerce endorsed Medicaid expansion citing the economic benefits, one of the first business groups to do so. A survey by AARP found that 54 percent of older adults in South Carolina support Medicaid expansion.
Meanwhile, several Republican governors across the country have dropped their opposition to Medicaid expansion. And Senate Majority Leader Harvey Peeler, R-Cherokee, said S.C. state senators “are legitimately torn” on whether to expand Medicaid.
That leaves an opening for the state Senate – where a coalition of moderate Republicans and Democrats occasionally outvotes the GOP majority – to pass Medicaid expansion, leaving the issue to be decided in House-Senate budget negotiations. But even if Legislature approves expanding Medicaid, opponents hold a trump card: Republican Gov. Nikki Haley and her veto pen.
House Minority Leader Todd Rutherford, D-Richland, said the Democrats’ proposal will “be an uphill battle” in the House. But, he added, “You’ve still got the Senate to deal with, and we’ve still got a governor who looks at other Republican governors around the country and, hopefully, she gets in line.”
But Haley spokesman Rob Godfrey said the governor is not budging.
“It’s bad policy now, and it will be bad policy next week, next month and next year – so, no, the governor will not change her mind on Obamacare,” he said.
S.C. House divided
The Democratic proposal is modeled on a similar plan in Florida. Democrats like to trumpet that Florida’s Republican governor, Rick Scott, changed his mind after initially opposing Medicaid expansion.
Democrats hope to expand Medicaid by attaching an amendment to the state budget. Most budget amendments are temporary laws, expiring after one year. But Democrats want to attach their proposal to the budget as a permanent law, known as a “part two proviso.” Part two provisos fell out of favor in the Legislature when Republicans took control, viewing them as irresponsible because they bypass the normal legislative process of being vetted by various committees.
But House Republicans attempted to pass a part two proviso last year – a tax cut for small businesses.
“I would suggest to you covering uninsured South Carolinians is just as important as ... some of the other things we have done through the years” with part two provisos, said state Rep. Gilda Cobb-Hunter, D-Orangeburg.
But House Republicans have other ideas.
They want to spend $83 million from the state’s Medicaid surplus to pay hospitals an incentive to cut their costs – primarily by steering low-income patients without insurance to free or subsidized health-care clinics instead of making expensive visits to hospital emergency rooms.
“They are going to spend $80 million and insure no one,” Democrat Rutherford said. “We are going to spend zero dollars and insure a half a million people.”
But only for three years, House Republicans point out. Then what?
In three years, if lawmakers decide to end the program, “I’m sure (Democrats) are going to be the first ones to say, ‘We’re inhumane. We’re cruel. How can you do that?’ ” said state Rep. Murrell Smith, R-Sumter, chairman of the House budget subcommittee that oversees Medicaid’s budget. “That’s the problem this plan represents. It’s just a path forward to avoid the discussion of the cost.”
S.C. Democrats say they like the Republicans’ cost-saving plan for hospitals and argue it would be a great way to save money to pay for the continued expansion of Medicaid after three years, when the state would have to pick up 10 percent of that cost. Democrats suggest the state set up a savings account to capture any savings in the Medicaid system created by the GOP plan, and save that money to help pay for the state’s share of the expansion.
The idea that added Medicaid spending would benefit the state’s economy is enticing, even to some House Republicans.
State Rep. B.R. Skelton, R-Pickens, a Clemson University professor emeritus of economics, said he knows adding $11 billion to the state’s economy, via increased health-care spending, would add jobs and increase tax collections – he just does not know by how much. Skelton said he is pushing his Republican House colleagues to make an economic, rather than a political, decision about expanding Medicaid.
Senate: Biggest battle
Thursday, state Sen. Vincent Sheheen, D-Kershaw, Haley’s presumed Democratic challenger for governor in 2014, endorsed a plan similar to what House Democrats will propose. That almost ensures Senate Democrats will vote as a block to expand Medicaid – meaning they only would need to win six Republican votes for Medicaid expansion to pass the Senate.
“The more time that passes and people understand the impact of what’s happening, the more likely you are to get the votes,” said Senate Minority Leader Nikki Setzler, D-Lexington.
The votes of some Senate Republicans clearly are in play.
State Sen. Hugh Leatherman, R-Florence, chairman of the powerful Senate Finance Committee, said he has not made up his mind about expanding Medicaid. Senate President Pro Tem John Courson, R-Richland, compared the issue to the 2009 fight over federal stimulus dollars. Then, Courson supported taking the federal money because, otherwise, it would have gone to other states.
Those who want to expand Medicaid say lawmakers now face that same decision again. It is not a matter of whether the federal money will be spent. It will. The only decision is whether the money will be spent in South Carolina or some other state.
“I would have to look at it,” Courson said of expanding Medicaid. “I, basically, have not made my decision.”
Asked if there were at least six Republicans who would vote to expand Medicaid, Peeler, the Senate Republican leader, responded, in effect, yes. “You probably already know who they are.”
But putting together a Democratic-Republican coalition with 24 or more votes will not ensure Medicaid expansion passes the 46-member Senate.
Peeler said he expects a senator who opposes Medicaid expansion to mount a filibuster, a procedural tactic where an opponent takes the Senate podium and refuses to give up the floor, to block a Senate vote.
“That will be the one of the biggest – if not the biggest – battles in the Senate this year,” he said.