Catching up on my e-mail, I ran across this release from our friend Wesley over with the Senate Republicans:
Senate passes bill giving DHHS budget flexibility
The state Department of Health and Human Services needs to crawl out of a $228 million hole for this fiscal year, alone. Next year, deficit estimates top $500 million. But, it doesn’t have to stay this way. That’s why Senate Republicans led the fight today to pass S. 434 — it removes budgetary constraints on the actions of agency director Tony Keck and gives him and his department more flexibility as it comes to this fiscal crisis.
The legislation, chief sponsored by Senate Majority Leader Harvey Peeler and cosponsored by Senators Kevin Bryant and Lee Bright, requires the ability to purchase generic drugs instead of more expensive name brands. Most importantly, it repeals part of a proviso that stopped any DHHS director from modifying the schedule by which doctors and hospitals were paid through the state’s administration of Medicaid.
“This bill is all about untying Mr. Keck’s hands and allowing him to do his job as effectively as he can,” Peeler said following the vote. “That doesn’t mean he has to cut programs, it means he can cut. With such a huge deficit, we need Keck to be running his own agency, not micromanaged by the legislature.”
The bill’s passage is also seen as a win for Gov. Nikki Haley. It both invests more power to an executive branch agency and hands those reigns over to one of her recent appointments. The budgetary problems within DHHS — and Medicaid in particular — have been high on issues to address for both the governor and the legislature as they entered this session.
Keck has said that he’s looking at making health care providers modify their staffing ratios, increasing patient co-pays and taking a hard line in favor medical tort reform. Senate Republicans are ready to help him in any way possible fix the agency’s financial problems.
“Flexibility.” I like that. It reminds me of when people who want to increase taxes call what they’re doing “revenue enhancements.” When conservatives in SC want to cut spending on life-and-death essentials, they call it “flexibility.” As euphemisms go, it’s sort of breathtaking.
I especially liked this part, so I’ll repeat it:
“This bill is all about untying Mr. Keck’s hands and allowing him to do his job as effectively as he can,” Peeler said following the vote. “That doesn’t mean he has to cut programs, it means he can cut. With such a huge deficit, we need Keck to be running his own agency, not micromanaged by the legislature.”
Translation: We’re going to flat make these cuts, but we are not going to take the responsibility. That’s what the governor hired Mr. Keck to do. Interesting how sometimes, the Senate sees granting power to the executive as a good thing. Take note, boys and girls. Take pictures, and remember so you can tell your own children, because this doesn’t happen often. Normally, as Cindi wrote on Wednesday, or Legislature is “fixated… on micromanaging the most mundane minutiae of state government…”
But flexibility — that’s a good thing, right? Sounds good, anyway.
Here’s the way what the Senate did was described by a neutral party (which is why we have the MSM):
The S.C. Senate gave key approval Thursday to a bill allowing immediate cuts in state payments to doctors and hospitals that treat patients in the state-run health care program for the poor and disabled.
Gov. Nikki Haley and the Department of Health and Human Services have sought to cut those payments in order to make up part of a $225 million deficit at the state’s Medicaid agency. Agency director Tony Keck said the state could save $2.4 million between now and June 30 for every percentage point that it cuts those payments.
The bill also requires HIV, AIDS, cancer and mental-health patients to use generic drugs or get prior approval from the state’s health agency to use more expensive, non-generic drugs.
So you’ve seen it described two ways — by the perpetrators and by the news media. Now, here’s the assessment of someone at the other end of the spectrum. Samuel Tenenbaum, the head of Palmetto Health Foundation, came to my table at breakfast to make sure I knew what was going on from the perspective of health care providers. He said it’s not a fiscal issue, but a moral issue, for this reason: Cut back on payments for care, and “people will die.”
This, of course, will be dismissed by folks at the first end of the spectrum who will describe Samuel as a bleeding-heart liberal Democrat whose ox is being gored. They’ll tell him to get out there and work harder raising money for the hospital, if he’s so concerned. But you know, I don’t distrust the judgments of people who are actually involved in the complex business of paying for health care. I tend to think that they, the involved parties, more than anyone else, may actually understand the situation. Call me crazy.
Later in the day, Samuel sent me this set of more formal talking points, elaborating on his stark assessment at breakfast:
• The ProblemFormer Governor Mark Sanford originally requested $659 million to fund the Medicaid program for fiscal year 2011-12. Governor Nikki Haley and her Medicaid director Tony Keck reduced that request by over $200 million. More than half of that reduction would be made up by reducing Medicaid payments to hospitals, physicians and other healthcareproviders.• South Carolina Hospital Association ProposalSCHA member hospitals support a temporary increase in the $264 million hospital contribution to the state’s Medicaid fund as opposed to a cut in hospital provider rates.• Why contribute rather than cut?• A 10 percent reduction in the rate paid to hospitals will “save” $47 million in state funds but “cost” the state almost $170 million in federal matching funds. As Mr. Beaman has stated, a 10 percent cut for Palmetto Health will result in a $22 million loss to our system.• Over 2600 South Carolina hospital jobs will be put in jeopardy.
So there you have it, a sort of Three Bears approach — perspectives on the issue from both ends and the middle. See what you think.
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If Samuel’s numbers are correct, then I don’t understand the strategy. Are we yellow? Why don’t we just secede already (again)? Then we can round up all the poor and sick, and put them on a barrier island. I’m sure some faith-based group will attend to them. Besides, it’s not like sick folks can’t log on to the internet and get their meds from Thailand (at crazy good prices). These Medicaid people need to think outside the box.
Folks are really hurting these days and it seems like our government is working against it’s citizens to help soften the blow. With layoffs and cutbacks everywhere the pain just gets deeper. This is just another blow to those of us who get up and go to work every morning just to put food on the table and keep our families healthy. All in the name of budget cuts. Seems like a big tax increase on the super wealthy would be a far more efficient and less cruel way to balance the budget.
All this is about altering how to pay for health care not in making health care more effective or efficient.
The Legislature cannot pass a law suspending the Law of Gravity, so old people will fall and break their hips. The General Assembly cannot pass a law telling young girls to get pregnant. The Legislature can however enable the governor’s Cabinet to pay less to the doctors and nursing homes and hospitals providing that care.
There’s some comment about the Legislature having “taken” the reserves built up by Mark Sanford’s HHS. First, state agencies do not have reserves like insurance companies do. Sen. Glenn McConnell is absolutely right: Agencies are appropriated money by the General Assembly, and are expected to spend that money as they outlined in their budget requests, or to return it and thereby alert the Legislature those budget forecasts had changed.
Mark Sanford used the Medicaid program as a giant sop to deny funding to other areas of state government in his quest to shrink it. HHS further built up those “reserves” by making it more difficult for old people, poorly educated people, and disabled people to fill out the annual re-enrollment forms. They fell out of the Medicaid program, but assuredly the providers helped them back in once they showed up for care.
Brad, maybe you have better contacts with the morgue at the State newspaper than I do, but I remember former HHS director Robby Kerr writing an op ed several years back that, towards the end, linked Medicaid expenditures to job creation. (Remember, health care machines may be fancy and expensive, but health care is a very labor intensive enterprise).
When HHS ran up $500-750 million in “reserves,” it was in reality withholding almost $4 BILLION in economic impact (due to federal matching funds that were running as high as 4:1 recently).
I have long felt that that this could be responsible in large part for why South Carolina’s unemployment rate was higher than its Southeastern neighbors.
Why HHS was permitted to hold those funds in reserve is beyond comprehension. Like the Employment Security Commission issues, people who are paid to monitor state agency spending were not doing their jobs in bringing financial anomalies out in the open.
A bit of history: HHS was set up in the early 1980s as the Health and Human Services Finance Commission, somewhat to improve the accountability of publicly funded health care but largely in reaction to the discovery that DSS which had previously operated the Medicaid program had amassed a $75 million “slush fund.”
So, yesterday’s slush fund became this era’s “reserves.”
Senator McConnell is right: If state agencies do not spend their appropriated dollars, those monies should go back to the General Fund so the Legislature can realign them.
This is way too long, and does not even address the basic issue that Medicaid has failed to resolve the problem that two-thirds of its expenditures go to only one-third of its beneficiaries who are carefully excluded from the high-priced managed care programs that were heralded by Sanford as a financial savior for the program.
Ok, so if we don’t cut the spending, where do you want the money to come from? What other budget items are you willing to cut?
Or are you advocating the easy route again – “raise taxes”?
I always find the argument about matching funds funny. You know those matching funds are coming from a federal budget that is already in the red by a trillion dollars? What happens when the federal government decides to cut out the matching funds?
The cuts have to come from somewhere. We all knew this was coming (and it was predicted by Sanford).
I know – let’s add a surcharge onto everybody’s SCEG bill. That’s a proven method of cowardice and money grabbing.
Or are you advocating the easy route again – “raise taxes”?
– Doug
That’s hardly the easy route but yes, that’s exactly what I’d do. Raise taxes on anyone earning more than 250k just like Obama wanted. That won’t make the Koch brothers happy but it certainly won’t affect most folks. Since most of the rich didn’t actually earn their money I don’t see where this is a moral imperative. Keeping a few folks who are in desparate need is however.
The rich got us into this mess with their high-stakes mortgage games and Wall Street shenanigans that created the housing bubble and intevetible collapse. Then there are the oil companies who receive sweetheart deals from Uncle Sam and pay little or no taxes. And the huge banks are not paying their fair share in taxes either in spite of a generous bailout. The hard working teachers, cops and regular people who suffer the most are not the cause of these massive budget shortfalls. No, it’s the fat cats who played Russian Roulette with people’s money. Now these rich welfare recepients are sitting on trillions of dollars in cash instead of hiring workers. Let’s tap into that pool of money to help pay medicaid and bolster pension funds so the folks who actually build and maintain this great country can enjoy some semblance of a good life.
Doug’s question about raising taxes can be answered with a resounding YES! Raise taxes on the wealthy now. It’s not the easy route though. In fact it would take a great deal of courage to raise taxes given the power of the rich. But it would be the right thngs to do. Let’s start by raising the social security limit to about a billion dollars. It’s the least they can do to help their fellow Americans. Then again, they probably don’t think of anyone making less than 10 million a year a “real” American. Too bad we have to fight this class warfare game. But the rich class is fighting it hard. It’s time for the rest of us to join in.
If you think we can balance either the state or federal budgets without raising taxes, you are a fool.
Yes, we need to cut spending at the federal level, and it’s not going to be easy to do. All those rich people keep getting richer and buying more and more Congressmen and Senators to fix the tax code so they can continue to get rich. Thirty years ago we cut the tax rates on the rich so they would create jobs. The result concentrated even more money in the hands of the rich. http://motherjones.com/politics/2011/02/income-inequality-in-america-chart-graph. Aside: Where are the effing jobs?
But, at the same time, we can only cut spending so far. We have to raise taxes. Let’s start by eliminating the mortgage interest deduction on second homes and on all mortgages with an initial value of over $400,000. (Let’s be real here. If the intent of the mortgage interest tax break is to help fulfill the American dream by subsidizing home ownership, don’t give it to people who don’t need it.)
Let’s continue (in South Carolina) by both repealing Act 388 AND eliminating the sales tax cap on cars and boats. Those two actions by themselves would probably come darn close to bringing the state budget back into balance.
There is no way to fix SC’s Medicaid program until and unless we can fix America’s health care delivery mess. It’s integrally connected.
Granting “flexibility” to DHHS to reduce provider reimbursements is just placing yet one more bandaid on a deep and bleeding wound. NOT GOING TO WORK. We’re just passing the misery of our dysfunctional health care system to yet one more group and calling it “fixed.” The poor just get it because they are downhill and we know where the sh** flows.
Here’s how this “flexibility” will ripple across SC and affect all of us, yes even those with good health insurance. Don’t panic…Those with health insurance can at least change life boats. Already across SC physicians office have started reducing the number of patients/visit from Medicaid patients. When these patients can’t find a physician to care for them they will turn to the safety net–the hospital emergency department. With reduced reimbursements, hospitals will have fewer folks working there. So emergency departments will be crowded and even more chaotic. The not so sick will leave, try another hospital, or simply wait until they are “sick” enough to receive priority.
The problem is the safety net is for all of us. If it has holes and gaps the insured as well as the poor and uninsured fall through.
Perhaps we can with this “flexibility” just make our Medicaid program cover hospice care so in SC we will have universal hospice care and we will at least assure ourselves of a dignified, if premature, death.
If we raised state taxes enough to cover the increased Medicaid payments to get the matching funds, our state’s economy would doubtless be the healthier for it, as well as those lousy, rotten poor kids.
Lynn said “There is no way to fix SC’s Medicaid program until and unless we can fix America’s health care delivery mess. It’s integrally connected.”
Well said.
The issues to address are that a wide majority of all health care expenditures result from end of life care and far too many people only have emergency room’s to turn to for medical care. These are structural issues – and moral ones. Punting as a solution just isn’t ever going to cut it.
@bud
“Since most of the rich didn’t actually earn their money I don’t see where this is a moral imperative.”
That pretty much sums up your view of the world in one sentence. You can’t even fathom that most people making more than $250K did so by their own efforts.
Here’s the list of state employees making more than $250K. Which ones didn’t earn it? How about we start by cutting all their salaries?
MEDICAL UNIVERSITY HOSPITAL AUTHORITY W. STUART SMITH VP/EXECUTIVE DIRECTOR $431,570.73 8/5/2010
SANTEE COOPER LONNIE CARTER PRESIDENT AND CEO $416,899.00 7/19/2010
SANTEE COOPER BILL MCCALL EVP & CHIEF OPER OFFICER $377,151.00 7/19/2010
UNIVERSITY OF SOUTH CAROLINA MARTIN MORAD PROFESSOR $373,700.00 9/13/2010
MEDICAL UNIVERSITY HOSPITAL AUTHORITY LISA P. MONTGOMERY ADMINISTRATOR $363,647.19 8/5/2010
UNIVERSITY OF SOUTH CAROLINA JAY MOSKOWITZ PROFESSOR $362,135.00 9/13/2010
CLEMSON UNIVERSITY CLAUDE LILLY III DEAN $358,550.00 9/13/2010
MEDICAL UNIVERSITY OF SC DURWOOD BACH DEPARTMENT CHAIR/HEAD $330,206.00 9/13/2010
CLEMSON UNIVERSITY JAMES BOTTUM VICE PROVOST $325,624.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA ERIC HYMAN ATHLETICS DIRECTOR $309,065.00 9/13/2010
SANTEE COOPER ELAINE PETERSON EVP & CHIEF FIN OFFICER $303,667.00 7/19/2010
STATE PORTS AUTHORITY JAMES I NEWSOME III PRESIDENT & CHIEF EX OFFICER $300,000.00 7/15/2010
MEDICAL UNIVERSITY OF SC FRANK TREIBER PROFESSOR $296,000.00 9/13/2010
MEDICAL UNIVERSITY OF SC STEPHEN LANIER ASSISTANT PROFESSOR $286,518.00 9/13/2010
MEDICAL UNIVERSITY OF SC GAIL STUART DEAN $279,488.00 9/13/2010
MEDICAL UNIVERSITY OF SC RICK SCHNELLMANN DEPARTMENT CHAIR/HEAD $272,480.00 9/13/2010
CLEMSON UNIVERSITY ESIN GULARI DEAN $267,650.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA DAVID OWEN PROFESSOR $267,650.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA STEPHEN KRESOVICH VICE PRESIDENT $266,666.00 9/13/2010
UNIVERSITY OF CHARLESTON GEORGE HYND SENIOR VICE PRESIDENT $265,000.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA HARRIS PASTIDES AGENCY HEAD $265,000.00 9/13/2010
SANTEE COOPER RENNIE SINGLETARY EVP OF CORPORATE SERVICES $261,162.00 7/19/2010
UNIVERSITY OF SOUTH CAROLINA MARY ANNE FITZPATRICK DEAN $260,580.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA MICHAEL AMIRIDIS PROVOST $260,000.00 9/13/2010
MEDICAL UNIVERSITY HOSPITAL AUTHORITY CHARLES BETTS ELLIS ADMINISTRATOR $259,208.14 8/5/2010
MEDICAL UNIVERSITY OF SC MARK SOTHMANN DEAN $257,550.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA STEPHEN SPURRIER ATHLETICS COACH $257,500.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA WILLIAM MOORE VICE PRESIDENT $254,873.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA WALTER PRATT JR. DEAN $254,873.00 9/13/2010
MEDICAL UNIVERSITY OF SC DAVID GARR ASSOCIATE DEAN $252,710.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA DONALD DIPETTE VICE PRESIDENT $252,500.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA MICHELLE DODENHOFF VICE PRESIDENT $250,000.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA WILLIAM HOGUE VICE PRESIDENT $250,000.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA RICHARD HOPPMANN DEAN $250,000.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA DARRIN HORN ATHLETICS COACH $250,000.00 9/13/2010
UNIVERSITY OF SOUTH CAROLINA DAWN STALEY ATHLETICS COACH $250,000.00 9/13/2010
Doug’s list raises an interesting point yet again.
How about Santee Cooper’s demise as a budget fix?
If France could privatize utilities, surely South Carolina can figure out a way to sell off Santee Cooper for a nice healthy profit to the state.
Do the athletics coaches actually do more work than some humanities professor who teaches three or four large classes and has to keep publishing or perish, and doesn’t even make the $50K cut-off?
I’d say there’s a large increment of unearned money represented there.
Doug: Thinking abut those salaries you have posted in all caps:
1) Bunch of them are USC coaches and administrators who brought in about $50 million in PROFITS for USC athletics.
2) Bunch more are prestigious prof-types at MUSC, who likely are linked to lucrative research grants, etc.
3) Others, like Santee-Cooper and Ports Authority are tied to economic activities that are profitable and create jobs.
A better list would be the far more questionable situation whereby bureaucrats retire and enter the TERI program, during which time they a) earn their current salaries and b) have up to 60 months of pension payments paid into an escrow account that is made available to them in the form of a cash payment upon the expiration of their TERI participation (with the Retirement Systems benefiting handsomely by hanging on to all interest earned).
I do not mind this scenario at all. It should result in a situation where the post-TERI employee enters retirement with a handy nest egg that, coupled with their pension and continued state health care, should guarantee a degree of financial independence not readily available to most folks.
What makes me angry, however, is the current situation where these post-TERI employees STAY in their jobs and continue to draw six-figure incomes and a monthly pension check and hold on to their nest egg.
The poster child for this is/was Frank Fusco, who ably led the Budget and Control Board before his retirement, through his TERI, and for several years afterwards. But there are dozens more embedded in secure Cabinet positions.
Mark Sanford, who I really despise but on occasion admired, wanted to address this by capping post-TERI pay at 75% of the previous salary.
Nevertheless, while that might drive out a few drones, the issue is that while TERI may be a good thing, once a bureaucrat benefits from it, it is time to move on, move out, and create opportunities for fresh blood and leadership.
(Another issue is that the new leadership likely will inherit the same pay as the old — while in the private sector efforts would be made to make the new leadership cheaper than the old.)