Policy analyst Theora Jones has been a little quiet at THCB lately, but the news that South Carolina is going to be giving all its Medicaid recipients HSAs got her a little riled up.

THCB recently pointed out that if the government could risk-adjust perfectly, we’d have no need for insurance companies, (Well I didn’t quite say that but close enough, MH) which is why this recent story from SC is so confusing–call me crazy, but I don’t think they’re out to replace the insurance industry.

So golly gee, what’s behind this? Does SC they think the private sector can control costs better? There’s no evidence of that. Do they think that people on Medicaid will get better care? Well, they’re not proposing any case management or disease management or quality measures, so…no. Wait, I think I’ve found the nut graph:

"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."

Ah, rationing. That’s neither new nor radical.

Please note that in order to qualify for Medicaid (2003 numbers), a mom in a family of three has to earn less than $7,510 a year. Disabled and blind folks have to earn less than $12,120 ($9k if they’re single). The old folks can pull down a cool $16,362, and kids can be covered even if their family of 3 is rolling in cash–up to $22,890! With disposable income like this, I’m SURE they’ll be able to make up the difference on that triple heart bypass. Or the asthma medication.

Legislation like this confirms my greatest fears–that HSAs are going to have a worse impact on the health care system than managed care ever did. Their effect on the health care system will be more pernicious and long-lasting–they will exacerbate the fragmentation and the injustices in the current system, and they will stymie the effects of reformers who are trying to achieve clinically focused quality improvements, greater access, and efficient financing.