Gov. Nikki Haley will propose cutting payments to doctors and hospitals for treating poor patients in a state-run health care program; requiring the use of generic cancer, HIV/AIDS and mental health drugs; and eliminating state funding of South Carolina ETV and the state Arts Commission in her State of the State speech tonight, according to an Associated Press interview.
The proposals are Haley’s first efforts at tackling a looming $829 million shortfall for the budget year beginning July 1. Haley did not brief the media on the contents of her speech, as was customary with former Gov. Mark Sanford.
The combined budget cuts proposed by Haley -- which could total up to about $110 million -- would save just a fraction of the total needed. But the new governor has said tonight’s speech is just the beginning of her rollout of budget-cutting ideas.
The largest savings would come from reducing what doctors and hospitals are paid to treat patients in Medicaid, the state-run health insurance program for the poor and disabled. For each percentage point reduction, according to the state Department of Health and Human Services, the state could save about $10 million. Lawmakers previously have barred the agency from cutting the rates that the state pays doctors and hospitals.
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Allen Stalvey, vice president of advocacy and communications for the S.C. Hospital Association, said hospitals have been preparing for this news.
“We anticipated that would be a potential alternative,” Stalvey said.
Haley did not specify the size of the rate cut to the Associated Press. However, former Gov. Sanford proposed cutting rates by 10 percentage points over a two-year period, according to his budget. A 10 percentage point cut would save about $100 million a year.
Hospitals are working on alternatives to a rate cut, Stalvey said, including increasing the $264 million in taxes that they pay to the state each year.
Still, Stalvey said, health care providers will be impacted.
“The small rural hospitals,” he said, “it could be disastrous for them.”
Ken May, executive director of the S.C. Arts Commission, said losing $2 million in state funding would shutter that commission's doors.
The commission, formed in 1967, supports South Carolina's arts community through arts education programs that bring authors, artists and dancers into schools, grants to individual artists, and operating money given to local arts organizations.
Much of the commission's state funding is matched by federal dollars.
"Cutting our funding means leaving federal dollars on the table and doing serious damage to the arts statewide," May said, adding a thriving arts community helps attract new industry and an educated workforce to the state.
"Everybody who talks about the world economy realizes that, if we are going to succeed, it must be through creativity and innovation. It's not going to be through blue-collar jobs or cheap labor. That's all gone overseas. If we're going to attract the people who work in those emerging industries, we have to offer a quality of life that attracts them," he said.
Eliminating the state portion of ETV’s budget would save $9.5 million.
Requiring poor patients on Medicaid and mental health patients to use generic cancer, HIV/AIDS and other drugs would save $991,000 a year, Department of Health and Human Services spokesman Jeff Stensland said.
Lawmakers previously have rejected some of the propose cuts – such as eliminating ETV and the Arts Commission. But they have said they are open to reducing what doctors and hospitals are paid to treat Medicaid patients due to the size of the state’s budget hole.