Politics & Government

SC Medicaid funds imperiled

WASHINGTON — President Barack Obama on Monday released $15 billion in economic-stimulus Medicaid funds for states to begin tapping Wednesday, but South Carolina may have to wait for its $173 million share.

South Carolina, North Carolina and Virginia had not met federal requirements to restore Medicaid services and broaden eligibility rules that were curtailed and tightened in state budget cuts last year.

The S.C. Department of Health and Human Services, which administers 90 percent of the state's federal Medicaid funding, acknowledged that it would not be able to meet the federal mandate by Wednesday.

Instead, the S.C. DHHS asked the U.S. Centers for Medicare and Medicaid Services if it could submit a "letter of intent" pledging to broaden the services and eligibility rules by April, in order to start accessing the first stimulus boost to state governments Wednesday.

"We're in communication with CMS," said Jeff Stensland, a spokesman for the state Medicaid agency. "We're trying to determine whether a formal letter of intent to restore eligibility would be adequate to begin drawing down those federal funds."

Gov. Mark Sanford has determined that three-quarters of South Carolina's overall $8 billion share of the stimulus plan — of which about $2.5 billion is in tax cuts — is beyond his control, including the $1 billion the state is slated to get in Medicaid funds, aides said Monday.

But of the stimulus money Sanford can influence, aides said, he will reject about $105 million in unemployment compensation South Carolina is slated to receive under expanded eligibility regulations that would provide benefits to part-time workers.

Sanford joined Louisiana Gov. Bobby Jindal in announcing plans to turn aside the money for unemployed workers, saying tax increases might be required to fund the expanded eligibility for part-time workers after the special stimulus funding ends.

South Carolina would still get $562 million in increased unemployment benefits that would pay for giving each jobless person an extra $25 a week.

On the Medicaid funding, the federal government wants South Carolina to restore its previous practice of granting aid of up to two years in "transitional assistance" to recipients whose income increases put them above the maximum levels.

South Carolina is also being asked to waive cost-of-living increases in Social Security benefits, as it did before the budget cuts, when it calculates Medicaid eligibility and assistance for some elderly, disabled and blind recipients.

Additional Medicaid funding for cash-strapped state governments is the biggest chunk of money in the $787 billion stimulus bill Obama signed into law last week as the core of his bid to jolt the economy and create or preserve 3 million jobs.

South Carolina is slated to receive a total of $1 billion in stimulus Medicaid funds. Despite opposition to the stimulus bill from Sanford, the S.C. House Ways and Means Committee has approved a $6 billion 2009-10 state budget that counts on getting the federal infusion.

Obama announced the release of the first $15 billion in additional Medicaid funds, making the first installment of his stimulus plan at a White House meeting with the nation’s governors.

"That means that by the time most of you get home, money will be waiting to help 20 million vulnerable Americans in your states keep their health care coverage," Obama told the governors.

Obama looked to his right toward three prominent critics of his stimulus package – Sanford, Jindal and Mississippi Gov. Haley Barbour – and urged them to help make the federal money work for the people of their states.

Sanford has gained national prominence in recent months with his outspoken objections to using deficit spending to stimulate the economy.

Sanford had said he might not accept at least some of South Carolina’s $8 billion share of the stimulus money, prompting House Majority Whip Jim Clyburn to craft several provisions aimed at bypassing governors who oppose the plan.

Clyburn's clauses authorize state legislatures to accept stimulus spending instead of governors and funnel school-construction funds directly to local districts.

As for the $1.3 billion or so that Sanford can affect, he is still scrubbing the massive spending measure to determine how its various mechanisms operate, said Joel Sawyer, a Sanford spokesman.

"We're still working cooperatively with our Cabinet agencies to get answers to their questions," Sawyer said. "There is a great deal of uncertainty about how this bill even works. At the staff level, we're going through the bill line by line, and we’ve having conversations with Cabinet agencies as well."

After Obama met with the governors, he oversaw a "fiscal responsibility summit" attended by members of Congress, key administration officials and outside experts.

Obama answered questions from the lawmakers in an afternoon session.

Clyburn told Obama that before coming to Washington, he had worked under two Democratic governors and two Republican governors in Columbia.

"It was remarkable the things we were able to do in South Carolina simply because we started thinking about what we needed to do for the people of our great state," Clyburn said.

Rep. John Spratt, a York Democrat and House Budget Committee chairman, said "a special process" would be needed to eliminate the government’s long-term deficits while funding expanded entitlement programs under Medicare and Social Security.

Sen. Lindsey Graham, a Seneca Republican, participated in a "breakout session" focused on Social Security funding with a smaller group of lawmakers and experts.

"I was somewhat skeptical of this whole exercise but found it to be informative and rewarding," Graham said afterward. "With good follow-up, it could produce results."

McClatchy Newspapers reporter Lisa Zagaroli contributed to this account