COLUMBIA — If South Carolina’s Legislature turns down federal Medicaid expansion, the state’s poorest residents will be left out of the health insurance provisions of the Affordable Care Act.
How many of them there are – whether 210,000 or more than 700,000 – and how hard the absence of coverage will hit them are subjects of disagreement between state officials and advocates for the poor.
House Democrats on Tuesday urged Gov. Nikki Haley and Republican leaders not to turn down Medicaid expansion. House Republican leaders responded that they will oppose “the implementation of Obamacare.”
Under provisions of the Affordable Care Act, anyone earning less than 138 percent of federal poverty level – about $15,000 – would be covered by an expanded Medicaid program.
If the state opts out of Medicaid expansion, those making between $11,000 and $15,000 still would be eligible for subsidized health insurance. But those making less than $11,000 wouldn’t be covered by Medicaid or be eligible for the subsidized private insurance. No provisions were included in the federal act for states to turn down Medicaid expansion, which became an option only with last summer’s Supreme Court ruling.
Children and adults who are disabled now already are covered by Medicaid. Seniors 65 and older fall under Medicare provisions. The Affordable Care Act aimed Medicaid expansion at poor working adults ages 18-64.
“Poor people, once again, will be thrown under the bus,” said Robert Greenwald, director of the Harvard Center for Health Law and Policy Innovation. “If you turn down Medicaid expansion, you don’t just lose; you’re worse off than you were before.”
Greenwald fears for the 284,000 uninsured people in the state currently making less than $11,000. In addition, tens of thousands of working poor, who are eligible for subsidized health insurance, would struggle to pay for it while people in similar financial situations in other states would be eligible for Medicaid.
The federal government will pay most of the cost of Medicaid expansion, 100 percent in the first three years starting in 2014 and gradually dropping to 90 percent in 2020. States that opt out of the expansion will be sending tax dollars to Washington for the program without receiving the benefits, Greenwald and others say.
Tony Keck, director of the state’s Medicaid agency, and Gov. Nikki Haley want the state to opt out of further Medicaid expansion. They say that the existing Medicaid program is wasteful and that expanding it will crowd out the state’s ability to spend on other important issues.
During the legislative debate, Keck will try to defuse the argument that the poorest of the poor are being left out if expansion is turned down. He says there are programs already aimed at the poor without health insurance, such as federally qualified health centers, rural clinics and free clinics.
“There is a current ‘safety net’ of health care resources for the uninsured that will continue to operate in South Carolina and nationwide,” Keck said. “In some cases, as a result of (the Affordable Care Act), new funds flow directly to these safety-net programs.”
Health centers brimming
The S.C. Primary Health Care Association, which represents the state’s 19 federally qualified health centers, sees it differently.
Those centers, which offer free or low-cost health care, say they were bursting at the seams with 326,000 patients last year. They don’t want more patients, they want healthier patients. And people with health insurance are healthier.
“Stop making health care about politics,” Lathran Woodard, executive director of the association, said at a gathering of health care advocates for the poor. “Make it about us.”
Dr. Stuart Hamilton, chief executive of the Eau Claire Cooperative Health Centers, which will be counted on to handle many of those left out of Medicaid expansion in the Midlands, also is wary of the oncoming wave of needy patients.
“If the capacity of the safety net was there, I would say great,” Hamilton said. “But the capacity is not there.”
Some federally qualified health centers are working at 95 percent of capacity already, Hamilton said.
“If there is a surge, there is no place to care for the surge,” Hamilton said.
But Keck contends other provisions of the Affordable Care Act, including the availability of subsidized insurance, will lead to a huge drop in the uninsured in South Carolina – to 210,000 from 731,000 – and thus a drop in patients at low-cost clinics. The “decrease in the uninsured relieves the burden on these safety-net programs so their remaining funds may be spent on fewer people – thus strengthening their financial position,” Keck said.
Critics question numbers
When Keck made a presentation to the Senate Medical Affairs Committee in November, he used that 210,000 figure, drawing jeers from health care advocates in the audience.
Weeks later, those advocates still had trouble with Keck’s math.
They contend Milliman, the actuarial firm hired by the state, took some giants leaps of faith to arrive at that number. The reduction in the uninsured was based on everyone eligible for subsidized insurance, under the Affordable Care Act, signing up for the insurance. That’s everyone earning $11,000 to $43,500.
Milliman also projected all of the 83,000 uninsured making more than $43,500 would buy insurance rather than pay a penalty for being uninsured. Also, it predicted tens of thousands of the poorest of the poor who are eligible for Medicaid, but for some reason don’t sign up now, would sign up when the major Affordable Care Act programs begin in 2014.
“These numbers are quite a stretch,” said Rozalynn Goodwin, director of policy research at the S.C. Hospital Association, which favors expansion of Medicaid.
The Congressional Budget Office estimates more than half of uninsured Americans subject to the mandate to have health insurance will choose to pay a penalty instead of buying insurance, Goodwin said.
Saying only 5 percent of South Carolinians will be uninsured even if the state does not expand its Medicaid program “makes light of the coverage gap S.C. will create by not opting in to the expansion,” Goodwin said. “Seventy to 80 percent of our uninsured citizens who would become eligible for Medicaid under the expansion will not have access to subsidies because they are below poverty.”
That means 150,000 to 185,000 people earning less than $11,000 per year will not be eligible for federal health insurance assistance or Medicaid, but a family of four making up to $92,000 can get federally subsidized insurance.
The Hospital Association has a vested interest in the expansion. One of the major funding mechanisms for the Affordable Care Act involves sending less federal money to hospitals because they will have to treat fewer uninsured patients. If South Carolina rejects that expansion, Palmetto State hospitals will lose that money while still having to treat many uninsured patients.
If South Carolina rejects Medicaid expansion, the state’s hospitals will lose $2.7 billion over the next seven years, Goodwin said.
“That cannot and will not be absorbed without some kind of negative effect,” she said. “Hospitals will take care of the uninsured. We can either let other states pay 90 percent of the costs or we will absorb it and pass it along to private insurers.”
High rate of uninsured
South Carolina has more to gain than most states.
Not only is the state near the top in incidence of most chronic diseases, but it also is near the bottom in percentage of residents covered by health insurance. The most recent accounting indicates 17 percent of South Carolinians are uninsured. That’s an improvement from the 20 percent rate used in a Kaiser Family Foundation report on state-by-state uninsured rates last year.
In the Kaiser report, only three states have higher rates of uninsured than South Carolina: Texas at 24 percent, Nevada at 22 and New Mexico at 21. Tied with South Carolina are California, Florida, Georgia and Maine.
Leaders in Georgia, Maine and Texas have said they plan to turn down expanding Medicaid. California, Nevada and New Mexico have said they plan to accept the program’s expansion. Many national observers already put South Carolina in the non-expansion category, though Keck and Haley don’t have the final say in this Legislature-controlled state.
Advocates say rejecting the expansion could defeat one of the premises of the Affordable Care Act that when more people are insured, more people will go to doctors for preventative care and early intervention, which will improve their health and save the system money in the long term.