Medicaid-overhaul draftsman advocates control over S.C. program

COLUMBIA - The architect for overhauling South Carolina's Medicaid program is an associate finance professor at a Cleveland State University think tank who says people want all the health insurance that someone can afford to buy for them.

"Americans, regardless of their incomes, want the best health care that someone else's money can buy," Michael Bond said in 2004 while testifying before the Ohio Medicaid Reform Commission.

In a recent interview, Bond, a senior fellow in health care policy at the Buckeye Institute in Ohio, said South Carolina's big problem is "there's no control on usage. You have a group of people who see no costs."

Gov. Mark Sanford has taken that to heart.

"There's always an unlimited demand for a product somebody else is paying for," Sanford told the nation's governors earlier this year at a meeting in Washington. "If you believe in the future of our country, you've got to look to the big three - Medicare, Social Security, Medicaid - entitlement spending."

Sanford now is seeking federal approval to make South Carolina's Medicaid program the first in the nation to require Medicaid recipients to buy health insurance and pay premiums with government-provided money or make co-payments for medical services for children who live in poverty.

Bond and Sanford met last year through the Washington-based Heritage Foundation, a conservative, nonpartisan think tank familiar with Bond's philosophical opposition to state-sponsored medical care.

Medicaid's state and federal dollars provide basic health care coverage for about 850,000 South Carolinians, including about half the births in the state and three of four nursing home residents.

For years, the program's rapid growth and sheer size have prompted calls to make Medicaid more efficient in South Carolina and elsewhere. In 1995, about 10 percent of the state's general-fund budget went to Medicaid. In the fiscal year that ended June 30, it had jumped to 19 percent. Without changes, the forecasts show Medicaid will consume 29 percent of the budget within a decade.

South Carolina and Florida now want federal approval of Medicaid overhauls based on Bond's economic models that some hail as bold and others as risky.

Critics say Sanford's plan is based on several unproven premises, including private insurers can deliver medical care more efficiently than Medicaid.

For instance, they say the cost of private insurance is up 41 percent in the past three years, well above Medicaid's 27 percent during the same time.

They also say there's a flawed premise that Medicaid recipients overuse medical services because they don't have to pay for them.

For instance, Robbie Kerr, Sanford's director of the Department of Health and Human Services, frequently says 5 percent of the state's Medicaid patients account for 55 percent of Medicaid's cost.

Those chronically ill people "are disabled and have long-term, high-cost needs," said Sue Berkowitz, director of the S.C. Appleseed Legal Justice Center and critic of the overhaul proposal.

Though Medicaid is considered a safety net for the health care needs of the poor, disabled and elderly, the plan proposes a cap on what the state can spend on indigent care, regardless of rising costs or more people needing help. For instance, as the state's unemployment rate has soared to one of the nation's highest, more people have turned to Medicaid for health care.

Change is needed, Berkowitz said.

"Let's make the changes we need to make to Medicaid, but let's find ways to do it without putting this risky financial proposal out there," Berkowitz said. "We compromise our funding ... and we put ourselves at risk."

"Look, nobody should suggest any of this is going to be perfect - it is not," Bond said. "A lot of Medicaid directors don't want to do this because they know it's controversial."

But the changes could work, Bond says. He says four private insurers already want to compete in South Carolina for Medicaid business.

Medicaid advocates worry, though.

"It seems like children, the poor and the elderly, those who cannot speak for themselves, are being taken advantage of," state Sen. Kay Patterson, D-Columbia, said. "The money should be there to take care of our people, those who cannot take care of themselves, regardless of what you have to do, whether it's to raise the cigarette tax or some other means.

"That's the purpose of government."