“This is going to mean instead of the fox guarding the henhouse, the fox would be designing the henhouse.” -Rep. Harold Mitchell
COLUMBIA — Gov. Nikki Haley has decided South Carolina won’t pursue any more grant money from the federal health care overhaul to fund a possible state-run health insurance exchange.
“The governor has said she’s going to evaluate these opportunities as they come as to what’s best for South Carolina,” said Tony Keck, the director of the state Department of Health and Human Services. “The one decision she’s already made is that there is no reason for South Carolina to apply for additional money related to health insurance exchanges.”
Keck made the comments on Thursday after the second meeting of the South Carolina Health Planning Committee, a group established by a Haley executive order that’s looking at setting up a state-run health insurance exchange and other opportunities to improve access to and reduce the cost of health care.
A health insurance exchange is an online marketplace where consumers can shop for and compare health insurance policies.
The federal health care overhaul dictates that states must set up their own exchanges to go live when the law goes into full effect in 2014 or have the federal government step in and set up one for them.
The government has the option of taking over the process in states not meeting certain benchmarks by the end of 2012.
The government’s stated goal in mandating the exchanges is to lower the cost of insurance for consumers by increasing competition and to reduce the number of uninsured people, about 17 percent of South Carolinians.
The South Carolina planning committee is funded by a $1 million grant from the federal government under the Patient Protection and Affordable Care Act.
The grant was applied for and received by the state under former Gov. Mark Sanford, but implementation began under Haley.
South Carolina is one of a group of more than 25 states that has sued the federal government in an attempt to overturn the law.
Several states have pursued a second round of exchange implementation grant funding, grants much larger than the up to $1 million pots doled out to states last fall.
Keck said the Palmetto State will take a different route, one that doesn’t involve more federal cash. He said it doesn’t make sense that a private-sector solution should rely on federal funds.
“If a health insurance exchange is going to save everybody so much money, then somebody should be willing to pay for it,” Keck said. “Either the employer should be willing to pay for it because it lowers their cost of benefits, or an individual should be able to pay for it because it lowers their cost of insurance. Or an insurance company should be willing to pay for it because it gets their product out to more people.”
Haley’s spokesman confirmed the governor’s position on not pursuing additional federal funding and declined to add additional comment beyond Keck’s remarks.
State Rep. Harold Mitchell, D-Spartanburg, said after the meeting Thursday that he is worried about the possibility of allowing the state’s exchange to be funded by the insurance industry.
Mitchell said the one entity with enough money to help fund an exchange is the state’s dominant health insurer, BlueCross BlueShield of South Carolina.
He said allowing the company to fund the exchange would represent a flagrant conflict of interest.
“This is going to mean instead of the fox guarding the henhouse, the fox would be designing the henhouse,” Mitchell said.
Mitchell has clashed with Haley over her handling of the federal health care overhaul since legislation he sponsored this year that would have created a state health insurance exchange lost Republican support when various tea party activists began voicing opposition.
Mitchell has said Haley’s office didn’t begin to take action on exchange planning until his bill began to pick up momentum.
Most of Thursday’s planning committee meeting was devoted to a big-picture look at problems and challenges within the state’s existing health care system.
Committee members heard from a panel of experts brought together by Lynn Bailey, a Columbia-based health care consultant, and the South Carolina Public Health Institute, which is working with state agencies on an initiative designed to support collaborative decision-making and expand the state’s ability to address implementation of the health care law.
“I thought it was a very good dialogue,” Bailey said. “It’s one that South Carolina has never, ever had before.”
There was little discussion specifically related to the exchange.
Informed of Haley’s decision not to pursue additional federal grant money for the exchange, Bailey expressed concerns that attempting to set up a privately-funded exchange – possibly using funds from the insurance industry – could draw federal scrutiny and cause the state to default to a federally-run exchange.
She said some South Carolinians, skeptical of the federal government, could be wary of buying insurance through such an exchange, reducing participation and the effectiveness of the program.
Bailey said she fears Haley’s decision to go after private funding for the exchange shows the governor is being driven by ideology and won’t be completely open to the committee’s eventual recommendations.
“I think she’s looking to pick and choose something out of this committee,” Bailey said.
Keck said the governor has her initial opinions but is open-minded and wants to hear about new ideas the committee comes up with.
Earlier this week, the Governor’s Office filled a long-vacant seat on the planning committee reserved for a consumer advocate or not-for-profit representative.
That seat had sat empty since Haley issued her executive order in early March. The new appointee is Tim Ervolina, president of the United Way Association of South Carolina.
Various task forces formed by the committee are set to begin work in the next few weeks on studying competitiveness and transparency, consumer-driven health plans, medical liability and IT infrastructure. Their work will be integrated into the full committee’s efforts.
The committee is scheduled to meet again later this month.
The panel’s recommendations must be delivered to the governor and the General Assembly by Oct. 28.
The $1 million federal grant expires in September, though the state could apply for an extension.
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