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Given the extent to which the broke-as-a-joke population of South Carolina is reliant on government-run health care, it should come as no surprise that the state’s Medicaid deficit is soaring.

In fact, the program’s annual deficit could climb as high as $350 million during the current fiscal year – which is just what happens when you add 100,000 people to the government health care rolls over the last three years. Meanwhile, South Carolina lawmakers have raided $550 million from a Medicaid trust fund and prohibited the S.C. Department of Health and Human Services (DHHS) from cutting optional services or lowering reimbursement rates.

Beyond shoddy fiscal management, the Palmetto state has a splintered, unaccountable and incompetent health care delivery system. In fact, this dysfunctional structure is one reason we opposed state lawmakers’ recent decision to raise taxes so that they could dump an additional $140 million a year down this same rabbit hole (thank you, Sen. Glenn McConnell).

Anyway, as it stands now there are over 975,000 South Carolinians currently on Medicaid – or one out of every five people in the state. That total includes 43 percent of the state’s children and 52 percent of all live births. And all of those numbers are going up …

And beyond the current year’s shortfall, there’s another looming deficit for the coming fiscal year (FY 2011-12).

How are South Carolina’s leaders responding to all this?

Well, McConnell told Associated Press reporter Jim Davenport that DHHS is preying on people’s fears by presenting a “worst-case scenario.” Meanwhile, S.C. Gov.-elect Nikki Haley’s office appears to be burying its head in the sand.

Medicaid funding through DHHS consumed a total of $5.7 billion out of last year’s $20.8 billion state budget – or 27.4 percent of the state’s largest-ever spending plan.

So … what should be done?

First, South Carolina must streamline its fragmented health care delivery system. There are far too many agencies in this state performing duplicative tasks, and the sooner government gets on the same page the sooner it can identify inefficiencies in the system. Once a streamlined health care structure emerges, that consolidated entity must then dramatically retool its eligibility and reimbursement criteria while at the same time stepping up fraud prevention efforts.

Oh … and stopping the legislative practice of raiding trust funds for non-essential spending would probably be a good idea, too.

Beyond that there’s not much the state can do. Medicaid is a federal program and until reforms to the system are adopted in Washington (i.e. private health accounts) we will continue to pour good money after bad …

Obviously, the biggest thing we can do at both the federal and state level is to adopt pro-taxpayer, pro-growth economic policies that keep people off of Medicaid rolls in the first place – and trust us, the only role the government should have in that process is cutting taxes and then getting the hell out of the way.

Once all of those reforms are accomplished (don’t hold your breath), the only thing left is to cut, cut, cut.

That’s an unfortunate reality, but if lawmakers won’t stop spending our money on their pet projects and economic development fantasies, more justifiable government expenditures will continue to suffer.

Another option?

Bailing on Medicaid entirely. With “Obamacare” poised to dramatically expand state health care costs,

Beginning in 2014 states must expand Medicaid to cover all non-elderly individuals with family incomes below 138 percent of the federal poverty level. “Obamacare” will pay for the first three years of this expansion, but in 2017 the burden begins to shift to states.

That will make an already untenable situation much worse … which is why several states are exploring the option of severing their ties to Medicaid entirely.