A sign on display at a press conference about Medicaid in the U.S. Capitol on Feb. 19, 2025. (Photo by Shauneen Miranda/States Newsroom)
The U.S. House of Representatives’ budget resolution, the blueprint for next year’s budget, has passed with instructions to the House Energy and Commerce Committee to achieve at least $880 billion in cuts.
Because the Medicaid program is such a large part of the committee’s expenditures, it is impossible to achieve this goal without substantial cuts to this essential program.
These cuts could make fundamental changes to the Medicaid funding structure.
A proposed possibility is the implementation of per capita caps, which would limit how much the federal government pays for Medicaid each year. It would cap federal spending on a per-enrollee basis. Through this model, the federal government would pay states a fixed amount per enrollee.
States would be responsible for any costs that exceed the cap, which would increase annually at a rate below the growth in health care costs.
South Carolina and all states would be at financial risk.
It would force the state to cut services like prescription drugs for adults or rates paid to physicians, hospitals, and nursing homes. Health care services would be reduced for vulnerable populations including older adults, people with disabilities, pregnant people, and low-income children.
Medicaid was introduced in 1965 under President Lyndon B. Johnson in attempt to extend access to quality health insurance coverage to low-income Americans.
Medicaid is administered by each state. Though Medicaid does provide quality health insurance to many, currently in South Carolina only certain groups of very low-income people are able to enroll in the program.
To qualify for Medicaid, a person must fit into one of the state’s eligibility categories (children, pregnant women, low-income parents, seniors, and people with disabilities) as well as have extremely low income.
Non-disabled/non-elderly adults without children are ineligible for Medicaid coverage in South Carolina regardless of their income level, as well as parents who are above 67% of the federal poverty level. (This year, that’s just $17,856 for a family of three or $21,541 for a family of four).
The state of South Carolina receives a very generous match rate from the federal government, with 69.5% of our program paid for basic adult services and 78.7% for children. This program, Healthy Connections, covers more than 635,000 children, 60% of all births in our state, and more than 63% of our seniors in nursing homes.
Seventy percent of all federal dollars that come to our state are to pay for our neediest residents’ healthcare.
This is the foundation for our healthcare system, helping to keep our hospitals solvent and open, allowing our healthcare providers to receive the resources needed to address the health care needs of the uninsured.
Without this infusion of federal dollars to our state, our healthcare system will crumble.
This assault on our healthcare and state budget will only be avoided if South Carolina makes up for these lost federal dollars with general fund state dollars. This will be millions of dollars our state does not have and will not be able to afford.
We are now facing this dilemma as Congress begins its budget process.
South Carolina would find its healthcare systems harmed, having to cut critical services to those who have no other option for coverage. If these costs are absorbed by the state, other needed infrastructure like education, law enforcement, mental health services and fixing our roads will be in competition for the same state dollars.
Congress proposed this same funding structure in 2018, and it was defeated. If Congress had adopted per capita caps, South Carolina would have had to budget an additional $135 million state dollars in the first two years (an estimated $40 million in 2019 and $90 million in 2020) just to maintain existing Medicaid coverage.
Almost all states would have exceeded the cap due to unexpected increases driven by new treatments (like the first U.S. drug priced at more than $1 million to treat hemophilia) or epidemics (like the opioid crisis).
South Carolina, with its low Medicaid spending per capita, would be hit harder than most other states, as the cap would reflect past spending rather than future needs to just keep the same benefits.
This proposal would not consider the large population growth due to the number of retirees coming to our state.
We must avert this crisis by keeping the Medicaid funding structure that was promised by Congress when this program was first enacted.
This drastic change would cause both fiscal and healthcare challenges that South Carolina cannot absorb.
We must protect Medicaid, our state budget and ensure that we protect those who need this lifesaving program.