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Gov. Haley’s Health Care Math: 1+1=0
In the next few months, Gov. Haley and the Republican politicians in Columbia are going to be making some very big decisions about providing health care for 513,000 South Carolinians, and there is over $3 billion at stake. These are some very large numbers and let’s hope they make the decisions based on math and not ideological purity. Right now, it looks as if math is losing.
First the numbers: today there are 513,000 people in South Carolina that are not covered under any health insurance program. That’s about 19% of our population and ranks us 42nd among the states. When it comes to children, we have about 14% uncovered and we rank even worse at 47th in the country.
All of this is about to change – for better or worse. Unless you have been living in a cave for the last couple of years, you know that we have just gone through a huge, gut-wrenching debate about providing health care to millions of Americans that don’t have it – i.e. Obamacare. The whole debate was extremely partisan and divisive but it’s now a done deal as the Supreme Court has upheld it and President Obama’s re-election has ensured it will be implemented.
The only question that remains is how Obamacare will be implemented by the states. The choice is pretty clear: either a state takes the federal money and works to implement the program or it fights against it, losses out on the money and their citizens suffer. There’s lots of heated rhetoric on all sides, but this is what it pretty much boils down to.
Here is where the math comes in. If we as a state sign up for Obamacare, 513,000 uninsured will get coverage and the percentage of uninsured will drop from about 19% to about 5%. The way it currently operates is that Obamacare will pay 100% of the cost of covering these new people until 2016 and after 2016, the states have to begin to kick in a little money. It will be 5% of the new cost from 2016 to 2019 and then after that the states will pay 10%.
To most of us, this seems like a no brainer – our people get covered and the feds pay most all the cost. The worst we can do is after 2019 and we will put up one dollar and Obama Care puts up nine dollars. I don’t know many folks who would turn down a 9:1 deal, but Gov. Haley and many statehouse Republicans want to do just that. They say that we can’t afford to put up our share.
To argue that South Carolina cannot afford the small additional funding required is just not so – and here are three ways we can get the money.
First, run the program efficiently. The reality is that if we as a state signed up for Obamacare and took the $3 billion in federal money and ran an efficient program, we could probably save the entire 5 to 10% match that we are required to put up. A recent dinner with two senior executives at Microsoft opened my eyes as to just how far we could go. They estimated that by simply installing existing state of the art technology, most state governments could save 15-20% of the budget. That’s huge. If we simply followed their advice, we could easily pay all the new health care cost and still have money left over.
Two: Design a smart health care system. $3 billion is a lot of money and it can either be spent smart or dumb. Spending this money smart means making if do more and go further. In the late 1990’s my company was hired by the Ministry of Health in Australia to write the first Internet plan for their country and health care. It was very early days in the Internet Age and there was a lot more that we didn’t know than we did but one thing was clear – there are huge financial savings to be had by creating the right incentives.
One small example: in Australia the pharmacists are paid by the government, and there were many independent pharmacists that were reluctant to adopt the new online ordering and payment system. We offered the pharmacists a deal – if you will get on the online system, the government will promise to pay you faster. It worked brilliantly and within no time most all pharmacists were online and millions of dollars were saved.
Three: Reform our corrupt tax system. Currently, our state allows $3 billion in sales tax exemptions every year and many if not most of these were enacted by a special-interest group hiring a lobbyist to get some sleazy deal through the legislature. The system is so bad that even the Republican appointed TRAC commission recommended that about $1 billion in deductions should be eliminated. But, when tax reform was up in the legislature last session, the lobbyists had their way and the whole thing fell apart in an orgy of special interest pleading, lubricated by generous campaign contributions. When all the deals were done, only $12 million out of $3 billion tax breaks were cut., That’s right – just 0.004%.
So the bottom line is this – it’s not about the math, it’s about ideological partisan politics. After having spent so much time spewing so much vitriolic rhetoric at President Obama and his health care plan, Gov. Haley and her Republican colleges simply won’t support Obamacare in our state – even if it’s needed and can easily be paid for.
1+1=0. One part partisan rhetoric plus one part political acrimony equals zero health care in South Carolina for the 531,000 people who need it.
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