The state's Medicaid program plays a central role in South Carolina. It provides benefits to 20 percent of the population-including 40 percent of all children-and pays for 50 percent of all births. One-third of the state's senior citizens receive support from the program, and 75 percent of all nursing home beds are paid for by Medicaid.
Although 74 percent of the people eligible for Medicaid are low-income families, children, and pregnant women and infants, only 36 percent of the expenditures are for such categories. Elderly and especially disabled people are much more expensive to treat. Thus, though they constitute only 26 percent of the eligibles, their total expenditures make up 64 percent of the Medicaid budget.
Medicaid spending increases have closely correlated with changes in the number of recipients over time. Both spending and recipients rose modestly from 1994 to 1997 but grew more rapidly thereafter, even through 2003. There has also been some increase in spending per case, due to increases in pharmaceutical costs and the proportion of clients who are elderly.
The lobby for Medicaid is extensive, including representatives of hospitals (association and individual hospitals), nursing homes, doctors, the pharmaceutical industry, AARP, and other advocacy organizations. Strong grass roots support also exists, especially for programs that provide intensive services to families (such as Continuum of Care, which supports severely disturbed children).
Two other factors also protect the Medicaid program from major cuts: the state has an attractive match rate (about 70/30), and the program is "not an elaborate one," as one official noted. Although the state's program provides some optional services and supports some optional groups, many of the services are either mandatory or provided to hard-to-cut groups. As legislative staff noted, "It's hard to cut nursing beds and maternity services. The constituencies would come out of the woodwork."
The programs funded by state's CCDF constitute a centralized, voucher-based system. It relies much more on federal than on state dollars and was thus not much affected by the economic downturn. It supports foster care working parents, child-protective services families under certain conditions, Head Start, TANF and transitional child care for welfare leavers, and teens going back to school. Slots for the non-TANF (and nontransitional) working poor are well below need levels: only 3,000 slots can be funded, compared to 80,000 eligibles. Despite the fact that child care has not been cut to date, there were discussions about reducing transitional assistance from two years to one after families leave TANF. But the cuts have been resisted partly because child care is viewed as one of the few significant benefits provided to TANF families. Like TANF, there are few advocates for child care, and the program is not on the legislature's "radar screen."
The Social Services Block Grant gets 10 percent of the TANF grant and focuses on mandated services: child and adult protective services, foster care, and various support services. Federal funding has declined in real as well as nominal levels since the mid-1990s. To deal with the declines, staffing and administration were cut, and programs were eliminated that were local in coverage (rather than statewide) and that had weaker performance records.
As noted above, child welfare programs were cut by the legislature in recent years-one of the larger items being foster care board payments and therapeutic provider rates. As a result of these cuts, DSS is using TANF funds to meet Title IVA-EA costs to the maximum extent allowable.
South Carolina's Medicaid spending is likely to grow well into the future, as its population is aging more quickly than in other states. Greater competition for TANF funds is also likely. Since the state's AFDC waiver expired and the state was forced to restrict countable activities to work, work-experience, and community service, demands for job services and child care were likely to increase. State tax revenues have begun to grow again in SFY 2004. But the state's reliance on consumption taxes may dampen long-run revenue growth as the shift from goods to services and to purchases through the Internet reduce the base for such taxes. Education programs are a very high priority among elected officials, and such programs may, along with Medicaid, crowd out nonhealth social programs.