The director of the state's Medicaid agency said last week that the state will not apply for any future federal funding to implement federal health care reform, and instead will rely on local tax dollars and contributions from private industries to fund the process.
S.C. Department of Health and Human Services Director Tony Keck also said the state would return federal money already paid out if authorities conclude that South Carolina is not spending its share as intended.
"We'll do our best to meet the conditions of the grant, but if we don't, we'll send the money back," Keck said.
South Carolina has received millions of federal dollars to implement various parts of the federal Patient Protection and Affordable Care Act.
Specifically in question is $1 million the state received to plan for a health insurance exchange -- an online marketplace where an estimated 700,000 South Carolinians will compare and purchase health insurance policies once federal health care reform takes full effect in 2014.
Through an executive order, Gov. Nikki Haley established a committee that would use the federal money to decide "whether or not the state should establish a health insurance exchange."
Her order, however, does not mesh with a statement Haley's spokesman released last week that characterized the federal mandate as "a spending disaster that she opposes and that our state does not want and cannot afford."
The statement continued: "She decided the state needed to study South Carolina solutions that deliver the most health to our citizens at the least cost."
By forgoing the millions of federal dollars available, the state will have to find local means of financing the exchange-planning process, estimated to cost about $5.3 million in fiscal 2012, according to a committee progress report.
Keck, speaking on behalf of Haley, said the governor's South Carolina Health Planning Committee will examine issues beyond the exchange question alone. Its members will determine who stands to gain from reform and therefore who should help finance it, he said.
Keck and another member of the committee, Casey Fitts, a Charleston surgeon, said consumers, local and state government, employers and the insurance industry -- who all eventually could see cost savings through economies of scale -- could be subject to helping bear the costs.
"We're not saying we're above the law. … We want to do our own due diligence," Keck said. "If you say jump every time the federal government says jump, you're doing a disservice to the citizens of the state."
The federal mandate says that state exchanges that have not made adequate progress by the end of next year will be subject to federal control.
Keck said state officials believe the federal government will not be ready by then.
"They're overestimating their ability to pull this off," he said.
Others, even one Republican, had other thoughts.
S.C. Rep. Dwight Loftis, a Greenville Republican who had supported state legislation that would have laid the framework for a state exchange, said South Carolina should fully prepare to implement the federal mandate.
That way, it could run its own exchange instead of defaulting to federal control, said Loftis, who opposes federal health care reform.
"I hope we do away with it," he said. "But if worst comes to worst, I'd rather have a state plan in place than use what the feds will draw."