Tax can help workers, employers

By NICOLE KAZEE - Guest Columnist

There finally seems to be agreement in the Legislature that South Carolina should increase its abysmally low cigarette tax, but there is less agreement on how to spend the money. As the Senate debates the issue this week, it should consider the option that would do the most to make the state more economically competitive: Expand Medicaid.

Parents in South Carolina can only access public health care if they earn less than half the federal poverty level, which for a family of three is $8,800. This means almost all working adults are excluded from the program. But the people who need coverage most desperately are precisely these low-income, working adults, who either aren’t offered coverage by their employers or can’t afford it.

Doubling the eligibility threshold, as the Senate Finance Committee has proposed, would allow many of them access to government benefits. In a country where the public generally only supports government benefits for the “deserving” poor, these hard-working adults who fall through the cracks of our dysfunctional health care system would seem to have a particularly strong moral case for expansion.

But there is a larger economic benefit to expanding Medicaid: It would help businesses. As health care costs skyrocket, employers (particularly small ones) are increasingly hard-pressed to provide insurance for their workers. Yet employees with health insurance are more productive and reliable than those without, regardless of who pays the premiums. In other words, when workers qualify for Medicaid, this takes the burden off of exactly the small and low-wage employers who find it difficult or even impossible to provide health insurance themselves.

In fact, businesses already know that expanding Medicaid will help them. The Covering Carolinas Collaborative, with the S.C. Chamber of Commerce standing front and center alongside Blue Cross Blue Shield, the S.C. Hospital Association and the S.C. Medical Association, is strongly advocating for Medicaid expansion as one of its four health care priorities.

This makes Medicaid the common ground among groups that rarely sit on the same side of an issue. Health advocacy organizations have been clamoring to raise the thresholds for some time, but their voices never get much of an audience in Columbia. Combining the likes of the Appleseed Legal Justice Foundation with the big hitters in the collaborative creates a pretty formidable team — one with cross-partisan support in the Legislature. And when facing a probable gubernatorial veto, cross-partisan support may be essential to the bill’s survival.

Beyond that, expanding Medicaid is one more thing that could make South Carolina a good place to do business. Far from hiding the fact that employers (like much-maligned Wal-Mart) save on their labor costs when their workers qualify for state health programs, we should embrace this as a broader benefit that could bring more jobs into the state.

Of course, these benefits don’t come cheaply. But they are far cheaper than the alternatives, because the federal government heavily subsidizes Medicaid. This means those cigarette tax dollars will go a lot farther than if they were used for just about anything else, including health-related tax breaks.

If the Senate wants to use cigarette tax revenue in a way that benefits the most people and gets the biggest bang for its buck, it needs to embrace Medicaid expansion. When working adults can access the program, it becomes something rare: a pro-worker and pro-business policy that we all should support.

Ms. Kazee, whose parents live in Greenville, is completing her doctoral dissertation at Yale University on business and health policymaking, with a focus on South Carolina.