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Article published Dec 4, 2005
Medicaid, the health insurance program for children in poverty, for low-income senior citizens in need of long-term care and for the disabled, is under fire lately for reasons both valid and invalid.
Waivers -- proposals that allow states to ignore some of the rules governing Medicaid -- have been proposed to reform the system. Some folks claim South Carolina cannot afford the much-touted growth in Medicaid expenditures without a waiver.
Such drastic measures may not be necessary. The good news is that the rate of growth of Medicaid expenditures shrunk dramatically in the first three years of Gov. Mark Sanford's administration, while the number of South Carolinians covered under Medicaid remained stable.
According to a Medicaid report, Medicaid expenditure growth in 2004 was 5.8 percent, lower than several national benchmarks and the lowest annual change since 1998. Excluding pharmacy costs, Medicaid growth was only 2.5 percent.
The bad news is that the growth in Medicaid expenditures this year is creeping up to 9 percent.
The ugly news is that according to estimates released by the Governor's Office, Medicaid at its current growth rate will expand from 19 percent of the budget to 29 percent in the next several years.
Fortunately, the ugly news isn't as bad if you look a little more closely at the numbers. The estimate of future growth the governor cites is based on almost flat general fund revenue growth -- 1.7 percent -- which wouldn't even cover population growth plus inflation. South Carolina's revenues have grown at an average 4.5 percent per year over the past decade, according to the State Budget Office. Based on that trend, Medicaid could grow to 22 percent of the budget. Granted, that's still more than 19 percent but hardly the dire prediction of 29 percent.
But that's still an increase. Again, there is good news. Additional cost containment measures can be taken without cutting recipients or benefits. Robbie Kerr, the Medicaid director, stated in a recent budget hearing that several million more dollars in savings could be realized in the second largest category of Medicaid expenditures -- drugs. However, it will be up to the Legislature to allow Mr. Kerr the flexibility to implement already recommended controls on drug costs.
Nursing homes comprise the third-largest category of spending in the Medicaid budget. Expenditures for nursing homes grew an average of 7 percent or more in the past several years. This will certainly drive up Medicaid costs as more people need long-term care.
But there's another way to fund long-term care at a much lower cost. Medicaid and other funding sources can pay for much cheaper home- and community-based services that allow persons to stay in their own homes. As we allocate new appropriations, we should direct those resources to lowering the huge waiting lists for Community Long Term Care (CLTC), Meals on Wheels and other programs. More than 3,500 frail and/or disabled adults are waiting for CLTC. In Florence, seniors must wait as long as two years to start receiving a meal through the Meals on Wheels program.
A recent South Carolina study shows that of seniors with similar health conditions, those who received Meals on Wheels had fewer emergency room visits than those who did not receive meals. So it's a smart financial decision to invest in services to seniors to help them remain in their own homes.
Finally, we can raise the cigarette tax. This eminently sensible suggestion bears repeating: We can raise the cigarette tax. AARP, along with so many other partners, has advocated for an increase in the cigarette tax for the past five years. Almost 70 percent of South Carolinians surveyed by AARP favored an increase. Our cigarettes are now the cheapest in the nation, which is a gilded invitation to smoke, smoke, smoke and reap the rewards of nasty health outcomes for years.
We need to dedicate any new cigarette tax revenues to Medicaid, which will ease the burden of Medicaid on the state's general fund. A serendipitous result of raising the cigarette tax is that it is the single most effective method to prevent people from smoking!
AARP South Carolina would like to work with the governor and our legislators to continue providing needed health care through Medicaid while containing its growth through the common-sense measures outlined above. Notice that we didn't even have to use the "w" word to find additional savings -- that's "waiver" to the uninitiated.
Teresa Arnold is associate state director for advocacy for AARP South Carolina.