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SC Medicaid director: Predictions could be way off

COLUMBIA, S.C. -- The director of South Carolina's Medicaid agency warned legislators Wednesday that the numbers of already-eligible residents signing up for the government program through 2014 could exceed estimates, further eating into state revenue.

The Department of Health and Human Service's preliminary budget calls for an additional $194 million in 2013-14, which would eat up all projected additional state revenue. Director Tony Keck told a Senate Finance panel that's his baseline, though he realizes the full amount won't be in Gov. Nikki Haley's proposal or legislators' final budget.

"Obviously, there will have to be changes," said Sen. Thomas Alexander, R-Walhalla, subcommittee chairman.

Keck said about $70 million of the increase is due to the federal health care overhaul, as half of those already eligible for Medicaid choose the coverage. But the number could be much larger, he said.

"I can't caveat this enough to talk about the uncertainty in the projections," he said. "If 75 percent show up, we're automatically behind."

Keck attributes the rest of the increase to inflation and the depletion of money previously set aside from the cigarette tax increase. As of September, about 950,000 South Carolinians were insured through the federal-state program for the poor and disabled.

His agency expects the federal law to add roughly 205,000 already-eligible people to Medicaid rolls through 2014, as people learn of the option, enroll to avoid fines, lose insurance through their jobs or opt for Medicaid over paying private premiums.

"We've always been liable for the coverage. Now the bill is coming due because they're likely to enroll," he said.

The total also includes 65,000 children in the state's poorest households who are being automatically enrolled by the agency this month, as approved in the current budget. The rollout began in Richland County, where the parents of fewer than three dozen children out of 4,000 chose to opt out. According to the agency's survey on why parents hadn't already enrolled their children, the vast majority simply didn't realize it was an option, Keck said.

The survey, to be given statewide, will help the agency better predict how many adults will sign up for Medicaid as provisions of the federal law take effect, he said.

Since they have long been eligible, the federal government will contribute its normal match rate of roughly 70 percent.

Keck's budget doesn't include expanding eligibility under the federal law known as "Obamacare." A U.S. Supreme Court decision in June made the expansion a choice for states instead of a mandate.

In South Carolina, parents qualify for Medicaid if their take-home pay is up to 50 percent of federal poverty guidelines. However, waivers allow deductions for child care expenses, child support payments and working income, allowing a family of three to make more than $16,000 and still qualify. Actual income limits vary by each family's circumstances.

The federal law calls for expanding Medicaid to adults whose yearly income is 130 percent of poverty guidelines, including those without children, who are currently ineligible no matter what they make. The federal government would pay the full cost of the expansion through 2016. After that, states would pick up 5 percent of the cost through 2019, and 10 percent thereafter.

Keck advocates against the expansion. But he notes his $194 million budget submission for 2012-13 would not change regardless.

"The trick is, the federal government is giving a teaser rate," he said about the eventual 10 percent match. He also questions whether the federal government could keep its promises, given the federal debt and impending budget cuts.

Alexander said he agrees there's too much uncertainty to expand eligibility.

"We need to focus on taking care of those eligible now," he said. "We're better off to not go in that direction."

But Sen. Yancey McGill, D-Kingstree, said legislators must explore the option.

"We can't afford not to provide health care to all the citizens of South Carolina," he said after the meeting. "Rural South Carolina simply can't be left behind. What we do not want to do is say no to any opportunity that's affordable."