Medicaid options fall short for state

Tony Keck

David Humphreys

COLUMBIA -- South Carolina can't rely on ideas from the Obama administration to control cost in the exploding Medicaid budget because the state's program already is much more bare bones than many other states.

Tony Keck, Gov. Nikki Haley's new Department of Health and Human Services director, said Friday that eliminating optional services such as adult vision coverage for Medicaid patients will hardly make a dent in the agency's $228 million budget hole.

And other options outlined by Health and Human Services Secretary Kathleen Sebelius this week, such as dropping coverage for able-bodied adults who earn less than $14,500, won't help South Carolina because the state doesn't provide them with coverage in the first place.

"While we appreciate the recognition by the secretary that state Medicaid programs nationwide are on the verge of collapse, several of the solutions offered are largely non-starters," Keck said in a statement.

"Co-pays, which could be effective tools to manage Medicaid, are in fact unenforceable under current Medicaid regulation.

"In South Carolina, elimination of optional services, such as adult vision, dental and podiatry solve only $3 million of a $228 million midyear problem, and suggested cuts by the secretary to so-called optional Long Term Care waiver services will only drive people into more expensive nursing homes. That is particularly ironic given that the Department of Justice is actively supporting federal lawsuits against several states for over-institutionalizing individuals."

Keck urged the federal government to give South Carolina and other states more flexibility to design and manage programs that work for them. States should be able to decide what services should be optional and what should be mandatory, he said. For example, pharmacy plans are considered optional, while nonemergency transportation is mandatory.

Meanwhile, Haley's focus remains on working with Keck to get the healthiest outcomes for South Carolinians by spending the least amount of tax dollars, Haley press secretary Rob Godfrey said. The Republican governor also is working with Keck to develop options for South Carolina to opt out of the new federal health care law that aims to provide all Americans with health insurance. Obama told Haley he would review her ideas.

Godfrey said Haley appreciates Sebelius' suggestions provided in a letter to her and the country's other governors, but Haley does not think the Obama administration has the right answers for the future of health care.

"If they really wanted to cut Medicaid costs, the Obama aministration would not have passed a health care law that will cost us almost $5 billion in Medicaid expansion alone over the next 10 years," Godfrey said.

Sebelius pledged support from the federal agency to the struggling states and outlined areas where they can look to save cash. Her suggestions included modifying benefits by cutting back on prescription drug coverage, dental services, speech therapy and other optional services.

She said the new health care law gives states with budget problems the flexibility to drop nondisabled, nonpregnant adults who earn more than $14,500 a year per individual. But South Carolina already doesn't cover them.

Sebelius also offered suggestions for better acute- and long-term care, noting that just 1 percent of all Medicaid beneficiaries account for 25 percent of all expenditures.

Keck is finishing his first full week on the job. He outlined his short- and long-term goals for changing the health care delivery system in South Carolina to House and Senate budget writers earlier this week. But his first order of business is dealing with the agency's deficit, a debt inherited by the Haley administration. Keck told legislators that it would be impossible for him to cut the Medicaid budget by $228 million without putting the entire program in jeopardy, given the late timing with the fiscal year ending June 30.

The state Budget and Control Board, chaired by Haley, will decide next week whether to allow the agency to run in the red. Because of the state's balanced-budget requirement, any deficit at the Medicaid agency will have to be made up elsewhere in the budget before the state closes the books June 30.