- The Washington Times - Wednesday, August 17, 2005

ASSOCIATED PRESS

On the left, they are calling it radical. On the right, the buzzword is bold.

Either way, South Carolina is proposing major changes in Medicaid, the giant federal-state health insurance program for the poor and disabled.

The state says its proposal to establish personal health accounts for most of the state’s 850,000 Medicaid recipients will “redefine health care in the United States.” The account would be used to purchase private health insurance, or pay for care directly. And the amount of money allocated to each account would depend on the person’s age, sex and physical condition.

That’s much different from the way Medicaid operates. Now, those whose incomes are low enough and who meet other eligibility requirements are entitled to receive certain approved health care services regardless of costs.

South Carolina would cap how much it will spend on a recipient, and if health care costs more than the account will pay for, then the low-income people would have to make up the difference themselves or go without.

States have to get waivers from the federal government whenever they want to use federal Medicaid funds in ways not authorized in federal law. But the implications of South Carolina’s waiver request, contained in a 42-page document submitted to the Centers for Medicare and Medicaid Services in June, extend far beyond South Carolina.

If South Carolina’s plan is approved, analysts say, other states will seek similar changes. Eventually, the experiment could influence national policy, said Nina Owcharenko, a senior health care analyst with the Heritage Foundation, a conservative think tank.

“Remember, welfare reform didn’t come from Washington the first time around,” she said. “It came from states like Wisconsin, which received waivers, and their work later encouraged new federal policy.”

South Carolina’s request is based on the thought that Medicaid has created little incentive for frugality.

South Carolina’s share of Medicaid expenditures has grown more slowly than the national average, but the state spends nearly 19 percent of its budget on Medicaid.

Some analysts say South Carolina’s proposal amounts to a cut.

Judith Solomon, a senior fellow at the Center on Budget and Policy Priorities, a liberal think tank, said many South Carolina residents would be priced out of health care.

South Carolina has relied on some faulty assumptions, Miss Solomon said. There is no evidence Medicaid beneficiaries get too many or inappropriate services.

Most important, she said, some people who are poor and sick will go without health care rather than pay more out of pocket.

“I think they’ll definitely be left unable to get the health care they need and could suffer serious harm,” Miss Solomon said.

But conservative think-tank analysts applaud the South Carolina plan. Devon Herrick, a senior fellow at the National Center for Policy Analysis, said the plan promotes personal responsibility.

“If they’ve made wise choices, they might have money left over,” Mr. Herrick said. “If they’ve made poor choices, it might take some money out of their pockets.”

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