The $660 million deficit

By Charles Sowell  

FEBRUARY 10, 2011 2:13 p.m. (0)

Allowing the state Department of Health and Human Services (HHS) to run a $100 million deficit through the end of the fiscal year has bought the state a little time, but not much else, said Megan A. Weis, associate director of outreach and program development at the South Carolina Public Health Institute.

The state Budget and Control Board voted this week to allow HHS to run a deficit of slightly less than half their projected $225 million funding shortfall in this fiscal year.

The fiscal year ends June 30.

“Essentially, this has bought them 30 to 60 days to come up with some solutions,” Weis said. “We can hope that the economy continues to improve and that they find a way to make up for next year’s shortfall.”

Projections indicate HHS will face a $660 million deficit in the next fiscal year in providing healthcare services to the state’s poorest residents.

Tony Keck, HHS’s new director, has blamed open-ended programs and a rise in the demand for Medicaid for the deficit.

Gov. Nicky Haley reluctantly supported the HHS deficit request and the budget board asked the governor and HHS to make up the rest of the money by saving dollars wherever they can.

Part of that savings would come from cuts in payments to providers, state officials have said. Plans in the legislature would ensure cuts to providers if any of the bills currently pending become law.

Keck has said a one percent cutback in payments to doctors and hospitals would result in an $11 million savings.

Weis said cuts in payments to providers could force doctors with large numbers of Medicaid patients out of business and would hammer hospitals across the state.

“In some ways our reach has exceeded our grasp when it comes to medical care,” said Roger Amidon, distinguished professor emeritus of Health Services and Policy at the Arnold School of Public Health at the University of South Carolina.

“It is clear that cutbacks (at any level) would force some doctors to stop seeing Medicaid patients,” he said.

How much HHS might cut provider payments will be a negotiation process, Heck said.

The state has serious money problems so far as Medicaid is concerned, Amidon said. How bad the next fiscal year will depend largely on the state meeting the federal government’s trigger point for additional funding to be provided.

Another money saving measure being considered by HHS is a revamping of procurement practices and limits on how many times a year Medicaid patients could use certain services.

Amidon said American society as a whole is running into a wall on health care costs. “We are handing out more care now than we can afford.”

Keck is to come up with a bare bones budget for lawmakers to consider soon. He has been on the job in Columbia for about a week and has served in a similar role in Louisiana.