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.

Phil Noble is a businessman in Charleston and is Pres. of the SC New Democrats, an independent group started by former Gov. Richard Riley to bring big change and real reform to government and politics.


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6 Responses to “Gov. Haley’s Health Care Math: 1+1=0”

  1. Ed Gold December 11, 2012 at 11:34 am #

    This is a great article. Heath care shouldn’t be a political football, particularly when we can cover so many uncovered people. Thanks!

  2. Roger Jones December 11, 2012 at 12:30 pm #

    How do we get everyone in SC to read this?

  3. Dave Fleck December 11, 2012 at 1:50 pm #

    Thank you, Phil, for your post reminding our state’s elected officials how important it is to put the welfare of the citizens of South Carolina over partisan politics.

    The opportunity in front of the Governor and State Legislature is the ability to provide health insurance coverage to over half a million SC citizens who are currently not covered and actually save money doing it! Independent research conducted by the Health Policy Center (HPC) found that prior to the enactment of the Affordable Care Act States experienced tremendous financial burdens in health care. For example, in 2008 States spent $17.2 billion on uncompensated care due to the large number of Americans without health insurance. Now the Affordable Care Act has come along and independent experts estimate that by increasing the number of insured Americans and reducing the amount States spend to care for the uninsured, the health reform law will save State and local governments as much as $80 billion from 2014 to 2019.

    Yes, this is an important opportunity which South Carolina needs to embrace with open arms. It will address the State’s dismal statistics mentioned in your post … i.e. 42nd in overall % of uninsured and 47th in % of children uninsured compared to other states. The act also puts patients and doctors back in charge again vs. insurance companies and HMOs. We’ve all experienced what the current system is like with arbitrary decisions on coverage, overruling doctors, dictating which medical providers we can and cannot see, not covering preexisting conditions, lifetime caps on medical expenses and numerous barriers when challenging their decisions.

    In closing, the Affordable Care Act will provide South Carolina new tools and resources to help residents finally get the health care benefits and consumer protections they need and haven’t previously been able to afford. At a time when our State and local Governments are wrestling with budget deficits caused, in large part, by the economic recession, the resources provided by the Affordable Care Act should be seen as welcome relief by our Governor and our State Legislature. It will finally enable all the people they serve to get the medical services they need to improve their lives at an affordable price.


    Dave Fleck

  4. gary bercume December 12, 2012 at 11:52 am #

    not only health care put people back to work

  5. Bruce Marshall January 15, 2013 at 11:55 pm #

    Phil, You make a lot of very good points, but you overlooked one that is even more fundamental: the multiplier effect of the initial infusion of $3b into the state economy. Right away this money will pay for more hospital staff, more clinics, more and better care with a resulting reduction of lost time to workers. All that income in turn is pumped through the local businesses. The result will be significant economic growth (more than $3b) and increased sales and income tax revenue that will more than cover the 10% share that falls on the state after 4 years. The multiplier continues to generate additional revenue while the Federal government pays the higher proportion. So, YES INDEED 1+1+2+3+4.= better health and more growth. How can any sane person reject that?

  6. Dianne Thompson February 19, 2013 at 9:42 am #

    Thanks for publishing this article. I finally understand what Obamacare is all about. I think it would be a terrible thing for South Carolina not to take advantage of this and help the over 500,000 people who need medical care.

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