One of the misleading features of articles those who disparage Medicaid expansion in South Carolina is the insistence that the program only benefits those who are enrolled in it.
The state’s Republican leaders, from Gov. Nikki Haley on down, uniformly oppose Medicaid expansion claiming that the program is in effect, no more than a welfare program that is unaffordable. There is abundant evidence to contradict these assertions.
Expanding Medicaid to almost 200,000 working South Carolinians who are not covered by their employers would create a substantial number of measurable positive economic benefits. Expansion would directly contribute to the growth of the state’s GDP (gross domestic product), the total annual value of goods and services produced here.
Growing the GDP is a much-prized bragging point for political leaders nationwide, including South Carolina. The injection of more than $10 billion in federal funds in the next five years would produce a profusion of economic growth factors.
Most prominently, several hundred thousand residents with insurance would have the means to purchase medical services.
With insurance that covers many of their medical costs, South Carolina’s working poor will be able to pay for other goods and services, expanding economic growth beyond the health care sector.
As a corollary, uncompensated care will certainly decline — all of the state’s hospitals collectively provide tens of millions of dollars of “free” care each year which is not paid for by patients — but which state, country, and city governments pay for directly and indirectly.
Job creation is another important aspect of Medicaid expansion. In South Carolina alone it’s estimated that up to 40,000 jobs would be created in the health care, insurance, and other sectors through the expansion of Medicaid. Even if only 25 percent of those jobs materialize, those numbers are comparable or exceed the number of jobs created by major corporations who have decided to invest in the state in the past decade. Mercedes Benz and Volvo are two such companies which have recently announced plans to build manufacturing plants in the state.
Corporate economic development prizes like Boeing, Mercedes and Volvo are always come with price tags in the form of state and county subsidies or incentives. These include tax write offs (the city/county/state forgo tax revenue), outright grants, and issuing bonds backed by state or local governments. Competition is fierce between states to provide the biggest subsidies to businesses thinking about starting operations in a state.
The up-front costs of these incentives for private businesses is sizable. For example, Volvo Cars decided it might want to build cars in North Charleston, Georgia, or North Carolina a few years ago. After intense bidding among surrounding states, South Carolina won the auction. Now South Carolina’s government owes Volvo over $200 million of incentives. The job payoff for South Carolinians is not insubstantial: Volvo will create around 2,000 new jobs in the next decade, and “perhaps” 4,000 by 2030, 15 years down the road.
Most of the incentives, including $70 million in subsidies in spending just approved by the state Legislature, will be paid “up front.” It is an uncontested fact that South Carolina and its counties will be (and are now) paying subsidies long before Volvo ever hires someone to build cars, build its factory, or pay taxes here.
So the big question is, why is Medicaid expansion wholly funded by the federal government that creates anywhere from 4,000 to 40,000 jobs in South Carolina in the next five years somehow less desirable than the promise of 4,000 jobs fifteen years down the line?
Yes, South Carolina would be responsible for 10 percent of increased Medicaid spending in the state after 2017, but at present, the state is paying 30 perent of this cost — which is growing anyway. The estimated Medicaid bill for the state after 2017 is uncertain because of the difficulty of offsetting the expanded number of those insured with a large reduction in the percentage paid by the state.
However, the respected Kaiser Foundation estimates the increase as 3.6 percent over baseline state Medicaid spending from 2014.
That is by any measure a bargain, especially when the economic benefits — jobs, insurance coverage, and related spending — will kick in immediately and any additional costs to South Carolina payable to the federal government will be delayed for more than two years.
In essence South Carolina’s political leaders have decided that paying 30 percent of Medicaid costs and keeping more than 200,000 working South Carolina taxpayers without subsidized insurance is preferable to the alternative. By paying 10 percent of the state’s expanded Medicaid costs, we will insure our working poor and promote sustainable economic growth. This does not make any sense either economically or from the standpoint of human compassion.
The Rev. Clementa Pinckney made these very arguments in favor of Medicaid expansion in the months before he was murdered, and they still ring true. Pinckney was man whose life was dedicated to relieving suffering as a minister and forging common sense solutions as a legislator. These two streams of compassionate service came together in his belief in the wisdom of expanding Medicaid in his native state.
Many conservatives love to quote Great Britain’s 1980s-era Conservative Prime Minister, Margaret Thatcher, to the effect that “the one problem of socialism is that socialist governments eventually run out of other people’s money.”
That’s an appealing sentiment, but in this case, it is also true of South Carolina’s conservative establishment — happily raining down public tax incentives and subsidies on corporations far in advance of any benefit to the state.
I prefer to remember the words of another Conservative British Prime Minister, Winston Churchill, who said after World War II when national health care was under debate:
“The discoveries of healing science must be the inheritance of all. That is clear. Disease must be attacked, whether it occurs in the poorest or the richest man or woman simply on the ground that it is the enemy; and it must be attacked just in the same way as the fire brigade will give its full assistance to the humblest cottage as readily as to the most important mansion. Our policy is to create a national health service in order to ensure that everybody in the country, irrespective of means, age, sex, or occupation, shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”
Frank Karpiel, Ph.D. is a historian, writer, and educator living in Charleston.