INNOVATION IN SOUTH CAROLINA

On the left, they are calling it radical. On the right, the buzzword is bold. Either way, South Carolina is proposing major changes in Medicaid, the giant federal-state health insurance program for the poor and disabled.

The state says its proposal to establish personal health accounts for most of the state's 850,000 Medicaid recipients will "redefine health care in the United States." The account would be used to purchase private health insurance, or pay for care directly. And the amount of money allocated to each account would depend on the person's age, sex and physical condition.

That's much different from the way Medicaid operates. Now, those whose incomes are low enough and who meet other eligibility requirements are entitled to receive certain approved health care services regardless of costs. South Carolina would cap how much it will spend on a recipient, and if health care costs more than the account will pay for, then the low-income people would have to make up the difference themselves or go without.

States have to get waivers from the federal government whenever they want to use federal Medicaid funds in ways not authorized in federal law. But the implications of South Carolina's waiver request, contained in a 42-page document submitted to the Centers for Medicare and Medicaid Services in June, extend far beyond South Carolina. If South Carolina's plan is approved, analysts say, other states will seek similar changes. Eventually, the experiment could influence national policy, said Nina Owcharenko, a senior health care analyst with the Heritage Foundation, a conservative think tank. "Remember, welfare reform didn't come from Washington the first time around," she said. "It came from states like Wisconsin, which received waivers, and their work later encouraged new federal policy."

South Carolina's request is based on the thought that Medicaid has created little incentive for frugality. South Carolina's share of Medicaid expenditures has grown more slowly than the national average, but the state spends nearly 19 percent of its budget on Medicaid.

More here

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For greatest efficiency, lowest cost and maximum choice, ALL hospitals and health insurance schemes should be privately owned and run -- with government-paid vouchers for the very poor and minimal regulation. Both Australia and Sweden have large private sector health systems with government reimbursement for privately-provided services so can a purely private system with some level of government reimbursement or insurance for the poor be so hard to do?

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