10 years after Affordable Care Act decision, 105,000 in SC still in insurance coverage gap

This is a story about numbers and dollars.

Tens of billions of dollars.

It's a story about how laws are written in Washington, D.C., and about how budgets are made in Columbia.

It's a story about power and politics. And it's complicated. Because the American health care system is nothing if not complex and political.

Like most stories, there are two sides to this one. Mainly, though, this is about people who live in South Carolina, the ones who have health insurance and the ones who don't. The haves and have-nots. People like Shawn, a 55-year-old homeless man who asked to be identified only by his first name for the sake of patient privacy.

Shawn calls himself a conservative. He insists he doesn't want handouts. He opposes them, actually. But Shawn can't work because he suffers from seizures and a pinched disk in his neck that's rendered his left arm completely numb. He needs surgery to fix it, to prevent possible paralysis. And he's totally dependent on hospital charity. That's because Shawn and an estimated 105,000 other South Carolinians fall into a health insurance coverage gap created by a confluence of factors set in motion almost a decade ago.

Nearly 10 years have passed since the U.S. Supreme Court first upheld the constitutionality of the Affordable Care Act during the summer of 2012. But the court did so with a caveat. One of ACA's central tenets - an expansion of the low-income Medicaid program to cover all adults who fall below the federal poverty line - became optional. The court decided states could not be compelled to participate in Medicaid expansion because each state would eventually need to contribute 10 percent of the expansion's cost. Many states immediately decided the deal was too good to turn down. Several other states, including South Carolina, opted out.

Republican leaders here haven't wavered from that decision since.

"Governor McMaster's position on Medicaid expansion remains unchanged," said Brian Symmes, a spokesman for Gov. Henry McMaster. "It comes with a crippling price tag for South Carolina's taxpayers and does nothing to accomplish the goal of giving impoverished South Carolinians the resources they need to find gainful employment and rely less on government assistance."

Ten years in, South Carolina remains one of only 12 states that has not expanded its Medicaid program under the ACA. Conservative leaders in Columbia have long contended that South Carolina can't afford it.

The Medicaid program in this state already covers more than a million people - more than 20 percent of the population - and costs nearly $8 billion a year to run. The 10 percent match South Carolina would need to find for the expansion would cost another $250 million, by some estimates.

Republicans in both the Legislature and in the Governor's Office have been arguing for nearly 10 years the money simply isn't there, even if the federal government is ready and willing to pump billions more into the state's Medicaid program. Their sustained position to refuse this federal money easily ranks as one of the most significant health care policy choices state leaders have made this century.

"I can't imagine in 10 years, nine years, how much we've missed out on. You're talking about billions of dollars - and people's lives. It's so sad," said S.C. House Minority Leader Todd Rutherford, a Columbia Democrat. "The fact that we continue to lose money daily just doesn't make any sense."

Economics aside, the Legislature's decision also leaves thousands of adults in South Carolina who fall below the poverty line - adults like Shawn - in this coverage gap with no insurance options. A bill making its way through Congress right now could change that by providing free private insurance for patients in the coverage gap. But there's no guarantee the "Build Back Better" bill will become law. Meanwhile, childless adults in South Carolina rarely qualify for Medicaid in South Carolina, no matter how poor they are. They're essentially shut out of the health care system save for the emergency room and low-income clinics that offer services on a sliding scale.

"Massachusetts, I had great insurance up there," said Shawn, who moved to South Carolina about two years ago after his father died. He chose South Carolina because he characterized it as "very Republican."

"I chose the state for the wrong reason," he said. "For me, it's the right reason because of my political views, but now that I need the health care, thank God for Roper St. Francis."

How it started

The architects of the 2010 Patient Protection and Affordable Care Act - Obamacare, as it's commonly called - crafted the legislation using a "three-legged stool" approach.

The first leg: Insurers would no longer be allowed to deny coverage or raise premiums based on preexisting conditions.

The second leg: A mandate that requires everyone to carry health insurance or face a financial penalty. This is often called "the individual mandate," and while it technically still exists, the fines associated with the mandate were repealed under the Trump administration.

The third leg: Subsidies to make private health insurance affordable for those above the poverty line, plus the expansion of Medicaid to cover everyone below it.

Christian Soura, executive vice president of the South Carolina Hospital Association, worked as deputy chief of staff for then-Gov. Nikki Haley in 2012 when the Supreme Court issued its landmark ruling and the question of Medicaid expansion first came up.

"It was clear there was not legislative support to do Medicaid expansion at that point," he said. "I don't remember there being a whole lot of debate internally about what the path forward would be."

Even so, Soura said that many of the core concepts written into the ACA were once considered "central to Republican orthodoxy." Ronald Reagan expanded Medicaid several times during his presidency, Soura pointed out, "but nobody looked at Reagan in the '80s as some kind of liberal." And Newt Gingrich once advocated for government subsidies that adults could use to buy private coverage, he said.

"Many of the elements of the ACA, I think, were pretty popular, were pretty well-liked. The individual mandate is what killed it," said Soura, who was later appointed by Haley to run the state Medicaid agency. "And because the individual mandate was so radioactive, everything else that was attached to that same piece of legislation basically went down with the ship."

Former S.C. Rep. Kris Crawford, an ER doctor from Florence and one of the rare Republican lawmakers who supported Medicaid expansion when he served in the Legislature, famously put it another way back in 2013 when President Barack Obama was in office: "It is good politics to oppose the Black guy in the White House right now, especially for the Republican Party."

Meanwhile, when HealthCare.gov opened for business in late 2013, tens of thousands of South Carolinians, regardless of their political affiliation, started enrolling in private coverage through the federal exchange. Most of them qualified - and continue to qualify - for subsidies based on their income that offset the cost of their monthly premiums. Some people only pay a few dollars a month for coverage.

Counterintuitively, many of the poorest adults in South Carolina don't qualify for those subsidies because that's how Obamacare was written. Only adults who fall above the federal poverty level get those. Everyone who falls below that line - equal to $12,880 this year for a single adult - was supposed to be covered by Medicaid. In South Carolina, though, that's not how it works.

How it's going

A few years back in Massachusetts, Shawn stepped outside for a smoke. He was living in a condo with his father at the time, and on his way back inside, Shawn tripped and fell. He broke his nose, several bones in his face and suffered a traumatic brain injury, though he didn't know it at the time.

After that fall, Shawn started having seizures. He estimated he's had 12 or 13 since he moved to South Carolina, and after every one of them he went to the emergency room. He's what industry experts call a "frequent flyer."

But emergency room care is inefficient and particularly expensive to deliver, especially - from the hospital's perspective - when the billing department has no hope of collecting any money from an uninsured patient. In Shawn's case, all he really needed was some seizure medication, so the ER providers at Roper St. Francis Healthcare referred him to the hospital system's Transitions Clinic in North Charleston. The practice was set up a few years ago to provide preventive care to patients like Shawn who have historically relied too much on the emergency room.

He told a doctor at the clinic about the numbness in his arm. They suspect he hit the back of his neck when he fell during one of his seizures, causing the spinal injury. Just before Thanksgiving, physicians at Bon Secours St. Francis Hospital in West Ashley performed surgery to fix the injured disk. Hospital charity is covering all of his bills. They're paying for Shawn to stay in a hotel near the North Charleston clinic while he recovers from the operation. And they've given him a cellphone so that his medical providers can reach him.

Normally, Shawn lives in a tent, subsisting on $2 hot dogs from Circle K.

"I'm scared," he admitted a few days before his scheduled surgery. The hospital will pay for his hotel room for four weeks after the operation. After that, Shawn assumes he'll move back into his tent. He's in the process of applying for Social Security disability but acknowledged that the approval process takes time.

"I don't have money coming in," he said, "so it's even worse."

Shawn isn't the only patient served by the Roper St. Francis Transitions Clinic who falls into this insurance coverage gap.

"We actually just had a patient diagnosed with breast cancer," said Amanda Biondi, a nurse and the program director for the Transitions Clinic. "The sad thing is, had she had medical insurance and was getting regular covered mammograms, she probably would have caught it before it was terminal. We just got her. She went to the ER with a place on her breast. They did imaging. I believe she's on palliative care now."

Similarly, in 2016, The Post and Courier published a series of articles about a Summerville man named Jim Connor who had been mysteriously losing weight for several months but couldn't afford to see a doctor because he fell into this same coverage gap. He was eventually seen by a low-income clinic, and then referred to a specialist in the community. He was diagnosed was esophageal cancer and died within the year.

These stories aren't particularly unique. A study published in 2019 by the National Bureau of Economic Research determined an estimated 15,600 people in non-expansion states died between 2014 and 2017 because of these states' refusal to expand Medicaid under the ACA.

The 'hidden tax'

Even though South Carolina isn't technically expanding Medicaid under Obamacare, the program is expanding nonetheless as the state itself grows. During the 2013 budget year, Medicaid in this state cost about $5.4 billion to run and covered nearly 900,000 adults and children. This year, it's going to cost $7.9 billion - slightly more than 70 percent of that covered by federal funds - and will cover more than 1.1 million people.

The pandemic is partly responsible for this growth. Federal rules have prevented states from kicking anyone off the Medicaid rolls during the health crisis, even if they technically don't qualify for coverage anymore.

Robbie Kerr was appointed by McMaster to run the Medicaid agency earlier this year. He previously served as the agency's director between 2003 and 2007. When he left the agency, Medicaid in South Carolina covered slightly less than 1 million people and cost less than $5 billion.

His budget request for the upcoming fiscal year is $8.6 billion. He needs to ask the General Assembly for $200 million more this coming year just to keep the program afloat.

"What are we getting for that? That's what our agency is trying to focus on right now," Kerr said. "Is it right to expand Medicaid when I can't deliver other services? I don't know the answer."

But proponents for expansion point out that not expanding Medicaid isn't free.

Thornton Kirby is president of the South Carolina Hospital Association and he explained it like this: "In the United States, generally speaking, we cover just about everything a physician would deem medically necessary. By and large, if you have insurance and your physician says something is medically necessary, it's likely covered. That is not the way most of the world does it."

Most other developed nations, he said, cover everybody, but not everything. "We look down our nose at that and say that is just terrible. They look at our system and say how can you leave so many people devoid of access to care?"

When Kirby speaks to community groups, he also points out that federal law in this country requires patients who show up in the emergency room to be stabilized and treated. Even though they may be uninsured, they are still guaranteed access to care in the ER, regardless of their ability to pay.

"In the United States, we're not going to let people die on the street, and you can go to a hospital even if you don't have money and you will get care. You may not get complete care, but you'll get stabilizing care," he said.

The U.S. system - that doesn't guarantee insurance coverage, but guarantees "rescue care" - is very expensive, he said.

South Carolina hospitals collectively provide about $1 billion worth of "uncompensated care" every year, he said, and the state Medicaid agency reimburses hospitals for about half of that.

That means that even though this state hasn't adopted the Affordable Care Act Medicaid expansion, hundreds of millions of tax dollars are still being spent on providing emergency care for the uninsured.

"All of us who have insurance end up paying this hidden tax," said Soura, the former Medicaid director who now works with Kirby at the Hospital Association. Like other previous Medicaid directors in South Carolina, Soura publicly opposed Medicaid expansion when he ran the agency, and now publicly supports it.

He referenced a study that found private health insurance premiums in non-expansion states like South Carolina are about 2 percent higher than premiums in expansion states.

"That at least suggests that maybe that hidden tax is basically a 2 percent tax," he said.

But there are other costs, too, he said, including the amount of money South Carolinians are contributing in tax dollars toward Medicaid expansion in most other states.

"The federal government pays $85 billion a year for Medicaid expansion. That is the amount that the 90 percent share costs for all the states that have said 'yes,' " he said. "South Carolina is about 1.5 percent of this country's population. So if you think that South Carolinians are paying 1.5 percent of $85 billion a year for the rest of the country to have Medicaid expansion, it means South Carolina is paying $1.3 billion a year for everyone else to have Medicaid expansion, but we're not willing to pay a fifth of that to have it ourselves."

The $2.2 trillion Build Better Better bill, passed by the U.S. House of Representatives in November, would essentially solve the coverage gap in South Carolina by providing subsidies for the uninsured to buy a private plan through the federal marketplace. But the legislation faces a tougher road in the U.S. Senate and its passage is far from certain.

Meanwhile, the S.C. General Assembly will reconvene in January. Experts agree that Medicaid expansion will not rank as one of the Legislature's priorities this session.