the medicaid hole

S. 434 suspends 4 provisos that will allow flexibility for provider rates to be cut. As you can assume, nobody’s happy with this resolution, and this solution won’t fix our problem alone, but would assist the Department of Health and Human Services (HHS) in filling this hole. Last week, the Senate Finance committee gave a favorable report to S. 434, by a narrow 11-10 vote with a minority report.

You are aware that DHHS faces a current-year shortfall of $225 million and an estimated shortfall for 2011-2012 of over $600 million. You may not be aware that HHS has almost no ability to manage its own budget. The General Assembly has through the years prohibited HHS from managing its agency by mandating most provider reimbursement rates and several specific brands of prescription drugs. Mandated reimbursement rates, which sit at least 30% higher than the national average, have cost SC almost $300 million over just the last three years. Also, I’ve been informed that several of the managed care programs in the Medicaid system have been poorly managed; probably another contributing factor to this deficit.

SC furthermore deprived itself of another management tool when it cemented eligibility levels in 2009 by accepting the Stimulus. I voted against taking that money, and we were told very plainly that the strings attached included the lock-in of Medicaid eligibility which ensured the growth of the Medicaid rolls. Now, Obamacare has made that lock-in permanent. Unfortunately, the SC General Assembly did his bidding two years early.

The simple fact is that we can either find ways to cut Medicaid costs now, or we can simply stop paying for Medicaid altogether. We will run out of money. Either that or we will continue taking money from law enforcement and education until that too disappears. Unfortunately, the Budget & Control Board will recognize at least a $ 100 million deficit, which essentially, kicks the can down the road and further procrastinates reform and exacerbates next year’s budget problems.

I am committed to finding solutions to the Medicaid funding problem. Doing nothing is not an option.