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SC could opt out of health care plan

South Carolina lawmakers have taken steps to effectively attempt to opt out of national health care reform without losing out on billions in federal funding.

Upon passage by the House and with the approval of Gov. Nikki Haley, South Carolina would join the proposed “Interstate Healthcare Compact,” an alliance made up of six states so far with several others considering legislation. The main effect of South Carolina’s version of the bill, passed last week by the Senate, would be the replacement of Medicaid with a block grant to the state, supporters and opponents agree.

According the bill, South Carolina would be entitled to all health care funding but could decide to suspend any federal laws or regulations on health care that don’t mesh with the state’s policies.

Essentially, the measure, passed with mostly Republican support, is an attempt to claim the funding the state would normally be entitled to while shielding the state from any of the normal strings attached. GOP state Sen. Larry Grooms of Berkeley introduced the bill last year and said it will allow South Carolina to write its own rules for Medicaid, ensuring the program’s long-term sustainability.

Opponents of the bill warned the state cannot handle the full administration of Medicaid and that the measure could jeopardize full federal funding. State Sen. Brad Hutto, D-Orangeburg, said if South Carolina joins the compact, it could lead to the creation of “Haleycare,” with the state being forced to determine eligibility requirements and reimbursement rates for care providers.

Grooms and S.C. Department of Health and Human Services Director Tony Keck, who supports the bill passed in the Senate, said the state already has the resources to run Medicaid.

“The bureaucracy is already in place,” Grooms said.

“If anything, we would save money because we could implement the same program without the bureaucracy needed to handle federal guidelines.”

Hutto said the Legislature’s passage of the bill is a “partisan jab” at the Affordable Care Act, the sweeping 2010 federal health reform law. The Supreme Court is expected to rule in June on the constitutionality of the overhaul.

Haley’s administration has thus far declined to create a state-run health insurance exchange, a key element of the law. Regardless of the outcome of the court case, the interstate compact supporters’ plan is to petition Congress for approval of the agreement once more states have joined.

Congress approves interstate compacts, many involving contiguous states, affecting areas like commerce, energy and conservation. But the health care compact goes further than most in attempting to replace federal law, and Congress is unlikely to pass it while Democrats still control the U.S. Senate.

Opponents say the compact doesn’t ensure federal funding levels will keep pace with the rise in medical costs.

“In some ways, it is a symbolic act, but if you get the right set of circumstances in D.C., then some pretty bad things follow from that,” said John Ruoff, a Columbia policy analyst who supports the health care overhaul.

“As you go longer term, the inflation numbers that are built into the compact don’t keep up with the cost of health care.”

Compact supporters said plans for dealing with the rise in medical costs can be adjusted as the compact moves forward. Keck

South Carolina and other Republican-led states’ resistance to implementing state run insurance exchanges preceded the federal government’s move to grant states more flexibility in exchange implementation, including the option for states to take an extra year to open their exchange if needed.

Keck thinks the move by states to join the compact could have a similar effect.

His agency asked the South Carolina bill’s sponsors to exempt the administration of Medicare from the state’s participation in the compact because the program for the elderly isn’t based on state boundaries, making it too difficult for South Carolina to handle by itself.

Other states’ interstate compact bills have included Medicare as a program to be replaced by a block grant.

Hutto also led the call from Senate opponents of the bill for the Medicare exemption, and state senators approved an amendment to the measure just before passing it that excludes the program from the compact in South Carolina without another round of approval from the Legislature.

The six states to join the proposed compact so far are Utah, Texas, Oklahoma, Georgia, Missouri and Indiana. Arizona Gov. Jan Brewer, a Republican, and Montana Gov. Brian Schweitzer, a Democrat, have vetoed bills that would have committed their states to the collaboration.