South Carolina has 2nd-highest medical debt levels in the U.S., but little hope of expanded Medicaid coverage

Sue Berkowitz's son was born in 1993 with a heart defect. Three years later, Berkowitz and her husband lost their health insurance when her nonprofit employer lost its funding. Private insurance denied her 3-year-old son health coverage because of his pre-existing condition.

Berkowitz was already working in health advocacy, but after her experience with her don, she became even more invested in her health advocacy and legal work in South Carolina. She worked to get votes from South Carolina to help pass the Affordable Care Act in 2010, which prohibits insurers from denying coverage due to a preexisting condition. Berkowitz cried as she watched the bill pass.

"I still remember sitting next to my son, who goes, 'Well, I know you've been working hard for this,'" Berkowitz recalled. "I said, 'I'm crying because you won't be turned down for insurance once you're on your own.'"

Two years later, South Carolina legislators made it clear Medicaid expansion would not be taken up there. Berkowitz, director of the South Carolina Appleseed Legal Justice Center, has been advocating for expansion ever since.

South Carolina is one of 12 states that has not expanded Medicaid to cover those living under 138% of the poverty level. It also has the second-highest level of people with medical debt in the country, at 22% — nearly double the national rate, according to data from the Urban Institute.

Experts say there is a link between Medicaid expansion and medical debt. In states that passed Medicaid expansion, medical debt decreased, said Theodoros Giannouchos, a professor at the Arnold School of Public Health at the University of South Carolina. Some states saw medical debt cut in half after passing Medicaid expansion, he said.

Medical debt often falls on the shoulders of uninsured, low-income adults who don't have children, Giannouchos said. Those are the same people who would most likely gain coverage under Medicaid expansion, he said. About 13% of people in South Carolina are uninsured, according to the Kaiser Family Foundation.

Without Medicaid, the options for care are limited. Many people end up in emergency rooms for non-urgent care needs that could be covered by a primary care provider, Giannouchos said. His research found rates of people going to emergency rooms for non-urgent medical problems is significantly less in states that have expanded Medicaid.

Free and charitable clinics in South Carolina try to offer an alternative to emergency departments for uninsured people, which helps them avoid medical debt, said the South Carolina Free Clinic Association Board Chair Suzie Foley. The free clinics try to help those who fall between the gap — adults who don't qualify for government coverage but can't afford insurance.

"The very people who most people assumed would get some relief from the Affordable Care Act, at least in South Carolina, have been totally left hanging out to dry with no coverage," she said. Even if Medicaid is expanded, Foley expects there would still be a gap to cover, but it's a positive step.

Foley sees the need for more coverage. Many patients with chronic illness often end up with medical debt that could have been avoided with coverage, she said.

"These bills that turn up for the uninsured are related to chronic conditions and are actually avoidable if they had access to care, if they had medication they could afford, if they could access follow-up care," Foley said.

In South Carolina, medical debt is worst in Marlboro County, where 37% of residents have medical debt, closely followed by Laurens County at 36.8%, according to the Urban Institute data.

Those with medical debt can have their wages or tax return garnished, Berkowitz said. A bill to stop health care providers from pursuing collections of medical debt or reporting the debt to credit agencies failed in the South Carolina House in 2021.

"We're seeing garnishment of wages and tax returns for people who can least afford it in South Carolina," Berkowitz said. "Some people are finding themselves with the little income they have taken."

Berkowitz said she feels for hospitals, which need the money to operate.

South Carolina hospitals provide more than $1.8 billion per year in free or discounted care, South Carolina Hospital Association Vice President of Strategic Marketing and Communications Schipp Ames said. The hospitals receive about 90 cents on every dollar spent on Medicaid patients, Ames said.

"When those payments are not received, it can have a significant impact on a hospital's ability to fund services for its community," Ames said.

Berkowitz hopes expanding Medicaid would benefit hospitals as well as patients, as patients who previously could not pay would gain coverage, she said. An estimated 350,000 more people would be eligible for Medicaid under expansion, according to the Urban Institute. It's estimated the number of uninsured people in South Carolina could decrease by about 37%, the Urban Institute found.

The hospital association advocates for health coverage for low-income South Carolinians, Ames said.

Expansion has not been passed by the Republican-controlled government because of politics, Berkowitz said. Republicans traditionally did not support Medicaid expansion. Some cite potentially high costs to cover the 10% cost of expansion that the federal government does not cover, Giannouchos said. Some worried about the reliability of the federal funding, he said.

There have been some changes in sentiments about Medicaid expansion and health coverage, he said. After 10 years the federal funding has not changed, Giannouchos said. The COVID-19 pandemic emphasized the importance of health care, he said.

The American Rescue Plan Act provided additional incentive: more money for states that newly expanded Medicaid. Giannouchos said states that expand Medicaid also often see decreases in other costs from public health coverage that goes unpaid.

The changes gave Berkowitz and other advocates she works with more hope.

"We do have renewed hope. We know there is an increasing need," she said. "We are hoping we can show economically what it means for the states and have a real discussion about that. We want to make the business argument."

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