Big Medicaid savings needed

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Gov. Mark Sanford has identified more potential cost savings for the state's badly bleeding Medicaid program. That's great news, but he's going to have to quickly announce more and much larger reforms to close a $170 million Medicaid gap.

Sanford said recently that South Carolina would join in the nation's first Medicaid multi-state pooling program. The program will allow states to negotiate higher discounts from pharmaceutical manufacturers through bulk purchases. The governor's spokesman was unable to say how much the state might save through the multi-state program.

Earlier, the governor had committed to another cost-savings plan that would require doctors to choose prescription drugs from a preferred list for their Medicaid patients. Establishing such a list also would allow the state to negotiate lower-cost bulk purchasing deals from drug companies.

The two initiatives certainly limit the drug choices for patients. But the state, facing a severe budget crisis, cannot afford an overly generous drug program. Moreover, the state's preferred drug list would likely be no more restrictive than the drug lists offered by most private insurance companies.

But the preferred drug list will save the state, at best, $13 million. Sanford and state lawmakers will have to speedily devise some other ways of saving money, including charging Medicaid beneficiaries modest enrollment and co-payments. Another option that has garnered wide support among health-care groups in the state is raising the cigarette tax. Initiatives at the federal level — including Medicaid reform and a prescription drug benefit for seniors — may help ease the budget crunch a little.

But without significant cost-savings or an increase in funding, thousands of poorer South Carolinians will be left without preventive medical treatment. Many will turn to hospital emergency rooms, the costliest form of medical care. The price of those emergency room visits will be passed on to those with private insurance.

In short, a failure to act on Medicaid will mean that private insurance costs will continue to soar. It's cheaper to the average South Carolinian to fund Medicaid than to allow costs to be transferred to private insurance. State Medicaid spending is matched, three-for-one, by the federal government, and Medicaid pays for preventive care, helping to keep patients from costly visits to emergency rooms.

Sanford's spokesman said more Medicaid reforms are on their way but was unsure when they would be announced. Sanford and state lawmakers are reluctant to raise cigarette taxes but the only alternative to higher cigarette taxes or meaningful reform will be to take away health care from thousands of poorer South Carolinians, jacking up private insurance costs.