Medicaid's phenomenal growth rate demands a new look at a system that soon will face costs the state and federal governments may not be able to sustain. Gov. Mark Sanford's proposal to bring market forces to bear on South Carolina's Medicaid program deserves thoughtful consideration, not knee-jerk opposition.

Mr. Sanford's administration has sought to contain Medicaid costs, and has reduced its rate of growth, while cutting waste and fraud. Even so, the increasing demands on the system are unsustainable in the long-term. Even in the short term there are serious problems. Now consuming 19 percent of the state's general fund, the percentage is expected to rise to 29 percent of the general fund in 10 years. Currently its expense is $4 billion, with the federal government picking up 70 percent of the tab.

The state should take the opportunity to make systemic changes that will ensure the continued existence of the program, which provides medical care to those meeting federal poverty guidelines. In South Carolina, that's about a fourth of the population. Clearly, the stakes are high.

Gov. Sanford has sought a waiver from the federal government to alter the state's Medicaid program from a claims payment service to create private health care accounts for Medicaid recipients. Accounts could be used to purchase health care or buy medical insurance. Private health care programs and insurers would compete for those funds; Medicaid recipients would decide which serves them best. Competition would be expected to cut costs, and recipients would have more choice.

"Our goal is to maintain quality," says Robert Kerr, state director of the Department of Health and Human Services. "We need to start searching for a solution. We can't create a system that costs more money."

South Carolina's problems with the rising cost of Medicaid are experienced across the nation. Hence the interest in Gov. Sanford's reform measure, cited in The Wall Street Journal editorial reprinted today on this page. The attention comes from those interested in solutions, but also from those who support the current Medicaid system, despite its expense and lack of flexibility. The Journal cites "scare stories designed to block reform before it becomes law."

This week's public hearing in North Charleston on the governor's proposal provides a case in point. State Sen. Robert Ford, D-Charleston, commanded an HHS official to "tell your boss to end this craziness because the Legislature isn't going to let it fly."

A more accurate measure of "craziness" would be to deny reality and allow the system to become so financially overburdened that it can no longer provide the services for which it was created. The governor's proposal deserves a fair hearing.