After resisting for 14 years, South Carolina lawmakers are considering Medicaid expansion under House Bill 3109.
South Carolina is one of 10 states that have not expanded Medicaid. The Affordable Care Act (ACA) allows states to expand Medicaid coverage to people with incomes up to 138 percent of the federal poverty level, currently $40,187.50 per year for a family of four, with a tempting higher federal funding percentage than for those below the poverty level. The American Rescue Plan (ARP) of 2021 offered further monetary incentives for expansion. From 2010 to 2023, the number of Medicaid enrollees in the United States increased from 54.5 million to 81 million.
Medicaid expansion is a very big commitment of state taxpayer funds. North Carolina picked up 450,000 new enrollees in just the first six months after expanding Medicaid last year. The state’s share of the cost of expansion was estimated at $325 million and $482 million for the first two years.
Contrary to expansion proponents’ claims, Medicaid is an inefficient, costly program. In 2010, states paid $130.9 billion for Medicaid and the federal government spent $266.5 billion. By 2023, those costs had more than doubled: $274 billion from states and $606 billion from the federal government.
Medicaid expansion does not improve people’s health, and it takes resources away from those most in need of care. An analysis by the Texas Public Policy Foundation found Medicaid expansion produced negligible average effects on health and resulted in increased mortality rates across several age groups. A study by the Mercatus Center found Medicaid expansion shifts resources radically away from low-income children to healthy adults below retirement age.
In sum, expanding Medicaid harms those most in need, analysts at the Foundation for Government Accountability found: “Details aside, there is one fact expansion supporters cannot escape: every penny spent on expansion is a penny stolen from the state’s most vulnerable citizens.”
Instead of expanding Medicaid to the non-poor, states should implement eligibility verification systems to ensure the truly needy receive help. “According to Centers for Medicare and Medicaid Services (CMS) data, $80.6 billion was improperly spent in 2022, and a staggering $98 billion was misspent in 2021,” wrote policy analyst Matt Dean at Health Care News. “The vast majority of these improper payments (66.4 percent for Medicaid) went to payments deemed improper because of eligibility issues.” After the Illinois Department of Healthcare and Family Services launched the Illinois Medicaid Redetermination Project in 2012, the Prairie State removed 400,000 ineligible recipients and saved an estimated $350 million per year.
Alternatives to Medicaid expansion are abundant. Examples include repealing certificate of need laws, expanding access to direct primary care agreements, and increasing telehealth options and health savings accounts. In 2024, The Heartland Institute released its study on American Health Care Plan: State Solutions, identifying what states can do to increase health care access and quality while reducing costs.
The following documents provide useful information about the effects of Medicaid expansion.
South Carolina H3109
https://www.scstatehouse.gov/sess126_2025-2026/prever/3109_20241205.htm
“A Bill To Amend The South Carolina Code Of Laws By Adding Section 44-6-120 So As To Provide That Beginning January 1, 2026, An Adult Sixty-Five Years Of Age Or Younger Whose Income Is At Or Below One Hundred Thirty-Three Percent Of The Federal Poverty Level, With A Five Percent Income Disregard, Is Eligible For Medicaid As Provided For In The Patient Protection And Affor[d]able Care Act, And Amendments To That Act.”
Is Medicaid Expansion Worth It?
https://www.texaspolicy.com/wp-content/uploads/2020/04/Blase-Balat-Medicaid-Expansion.pdf
Medicaid expansion benefited insurers, hospitals, and providers while the population’s health worsened and average life expectancy declined in expansion states, Dr. Brian Blase and David Balat of the Texas Public Policy Foundation found. “The ACA significantly expanded insurance coverage between 2013 and 2017, but Americans’ health worsened during this period as life expectancy declined for three consecutive years from 2014 to 2017,” the authors write.
As Medicaid Expands, Hospitals Close
Two scholars from the Foundation for Government Accountability found Medicaid expansion causes hospitals to close down because the program’s reimbursement levels are so low, just 62 percent of what private insurance pays. “In 2013, the final year before ObamaCare’s implementation, hospitals in expansion states reported just over $10 billion in losses due to Medicaid,” the researchers write. “The most recent data, from 2021, show the shortfalls ballooning more than 115%, to $22.3 billion. By comparison, the shortfalls in states that didn’t expand Medicaid grew by only 6%.”
American Health Care Plan: State Solutions
Researchers from The Heartland Institute explain what states can do to make health care more accessible and affordable while awaiting a comprehensive federal plan to replace the outdated, wasteful, access-denying, government-warped health care system.
The Affordable Care Act’s Medicaid Expansion Is Shifting Resources Away from Low-Income Children
”States that expanded Medicaid per the terms of the ACA spent only 5.9% more per capita on children in FY 2019 than they did in FY 2013 compared with growth of 22.7% in per capita spending on children in nonexpansion states and of 27.0% in average healthcare spending per capita for the US population as a whole.”
The Growing Medicaid Expansion Bubble
https://heartland.org/news-opinion/news/the-growing-medicaid-expansion-bubble?source=policybot
In this edition of the Consumer Power Report, Executive Editor Justin Haskins examines Medicaid expansion and all the problems it has created for states, physicians and patients. “Despite the lack of attention the issue is getting, the growing Medicaid population could lead to state government meltdowns around the country and a national health care crisis for which most Americans are completely unprepared,” wrote Haskins.
Government Report Finds Obamacare Medicaid Enrollees Much More Expensive than Expected
http://www.forbes.com/sites/theapothecary/2016/07/20/government-report-finds-that-obamacare-medicaid-enrollees-much-more-expensive-than-expected/ – 75a85aba2dd0
The costs for newly eligible adults do not decrease as expansion supporters predicted they would. HHS says newly eligible adult Medicaid enrollees cost about 23 percent more than the Medicaid enrollees who were eligible prior to expansion, analyst Brian Blase reports.
Effect of Medicaid Coverage on ED Use—Further Evidence from Oregon’s Experiment
http://www.nejm.org/doi/pdf/10.1056/NEJMp1609533
This study found people enrolled in Medicaid significantly increase their emergency room visits for at least two years after they first sign up.
Medicaid Increases Emergency-Department Use: Evidence from Oregon’s Health Insurance Experiment
https://heartland.org/publications-resources/publications/medicaid-increases-emergency-department-use-evidence-from-oregons-health-insurance-experiment
Highlighting the program’s inefficiency, this study notes, “Medicaid coverage significantly increases overall emergency use by 0.41 visits per person, or 40% relative to an average of 1.02 visits per person in the control group.”
Evidence Is Mounting: The Affordable Care Act Has Worsened Medicaid’s Structural Problems
https://heartland.org/publications-resources/publications/evidence-is-mounting-the-affordable-care-act-has-worsened-medicaids-structural-problems
Analyst Brian Blase shows Medicaid expansion has worsened many of the program’s structural problems. “The unanticipated expense casts doubt on the value of the ACA Medicaid expansion. In addition to excessively boosting enrollment, the program “encourages states to set high fees for services commonly used by expansion enrollees and high payment rates for insurers participating in states’ Medicaid managed care programs,” wrote Blase.
Nothing in this Research & Commentary is intended to influence the passage of legislation, and it does not necessarily represent the views of The Heartland Institute. For further information on this and other topics, visit the Health Care News website and The Heartland Institute’s website.
The Heartland Institute can send an expert to your state to testify or brief your caucus, host an event in your state, or send you further information on a topic. Please don’t hesitate to contact us if we can be of assistance! If you have any questions or comments, contact Heartland’s government relations team at [email protected] or 312/377-4000.
S. T. Karnick
S. T. Karnick is a Senior Fellow at The Heartland Institute.
