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Where does debt come from? How does it get so out of hand? And why is it such a difficult topic to discuss?On South Carolina Public Radio's InDebted, host Scott Morgan explores the issue of debt in the Palmetto State, including medical debt, student loan debt, short-term loan services, financial literacy, and more. According to research by the Urban Institute on the amount of personal debt burden across the U.S., eight of the top 50 counties with the most debt were in South Carolina, with more than half of the residents living with excessive debt. Join us for a deep dive into the factors that make our state one of the worst places for debt in the country and the stories of real South Carolinians living in this ecosystem of debt.Interested in sharing your personal story with debt? Learn more about our InDebted Profiles series here.

InDebted Explainer: Poverty, health insurance, TANF, and medical debt in South Carolina

Scott Morgan

First the good news – South Carolina, according to a 2022 report by Forbes, is the least-expensive state south of Virginia in which to get medical care. The average cost of health care per person in South Carolina is $8,362.

South Carolina also has one of the lowest rates of adults reporting unmet mental health care. Twenty-two percent of South Carolinians reported not seeking mental health care because of the cost. That’s a lower rate than every state except Connecticut and Massachusetts – and a lot better than the rate in North Carolina, which is 51 percent.

Nevertheless, South Carolina has a medical debt problem. This state, according to data from the Urban Institute, has the second-highest share of residents with medical debt gone to collections – 22 percent.

We also have one of the lowest rates of insured residents – 12.2 percent – in a state that is one the last 10 to not have expanded Medicaid access. We’re also in a state with a higher percentage of residents living in poverty than the national average – 14.6 percent, compared to the U.S. average of 11.6 percent.

So how does all this come together? Well, as usual, complicatedly. So let’s take a look at the Medicaid landscape in South Carolina, then at the poverty landscape, to see how they relate to lack of insurance coverage.

Medicaid. As we have reported through the InDebted project, proponents of expanding Medicaid under Affordable Care Act provisions cite volumes of data showing how states that have expanded the program have seen medical debts shrink and access to care expand.

Critics, such as Gov. Henry McMaster, say Medicaid expansion is a bad deal for South Carolina that will end up costing the state more in the long run than the federal incentives can cover.

A 2021 report by the nonpartisan, nonprofit South Carolina Institute of Medicine and Public Health makes the case that while “Medicaid expansion is one of many tools to increase health equity,” it is an especially effective tool. Case studies in Montana, Louisiana, Kentucky, and West Virginia, which have expanded Medicaid access, show significant upticks in access to care and significant drops in the amount of unpaid medical bills.

“Uncompensated care costs as a share of hospital budgets in Kentucky,” the report states, for example, “decreased 64 percent between 2013 and 2017. This figure reflects an excess of $580 million dollars in savings across the state.”

And that’s just the money. In terms of health outcomes, Medicaid expansion in Kentucky has been credited with dropping the number of residents going without care by 40 percent following expansion (2013 to 2014), and with saving 700 Kentuckians ages 55 to 64 from premature death.

According to Medicaid.gov, between 18 percent and 23 percent of South Carolinians are enrolled in Medicaid or CHIP – the Children’s Health Insurance Program offered through Medicaid. That’s not among the lowest rates in the country, but it’s still lower than 26 states, though typical for much of the South.

But the South Carolinians who do use Medicaid and CHIP rely on the program for a lot. South Carolina leads the U.S. in the percentage of program members receiving prenatal and postpartum care – 91.6 percent – through Medicaid. Almost 61 percent receive regular adolescent well-care visits; 44.5 percent of recipients age 20 and younger receive regular preventive dental care visits because of the program. All three averages are above national medians for those categories.

Income levels needed to qualify for Medicaid are a little complicated to explain here (try this link to the state Department of Health and Human Services). Depending on what category you access within Medicaid (age, blind, or disabled; individual; pregnant women and infant) your income must be within a certain range of the federal poverty line (FPL) to qualify for it.

However, when you break the numbers out, you quickly see it’s a very limited number of people who even qualify for Medicaid coverage in South Carolina. To qualify here your income must be within:

  • 199 percent of FPL if you are pregnant
  • 67 percent of FPL if you are a parent, or
  • 100 percent of FPL if you are a senior or are disabled – childless adults do not qualify at all in South Carolina, whatever their income.

For 2023, the federal Department of Housing and Human Services has set FPL at $14,580 annual income for a single person and $24,860 for a family of three (Alaska, Hawaii, and the District of Columbia have different numbers).

Poverty and insurance coverage. A report released by the Kaiser Family Foundation in March estimates that 166,000 South Carolinians (about 15,000 more people than live in the City of Charleston) could qualify for Medicaid if the state adopted expansion.

Every county in South Carolina has double-digit rates of uninsured residents, according to U.S. Census data. The county with the lowest rate of uninsured South Carolinians is York, with 10.9 percent. On the other end of the continuum is Saluda County, where 21.4 percent of residents are not insured.

The statewide average of all uninsured South Carolinians is 12.2 percent. Fourteen counties are at or within a half-percent of that number; 24 are above it – meaning 38 counties out of 46 have higher rates of uninsured residents than the state average.

The Census Bureau does not track every municipality in South Carolina. But where there are data, the numbers show that 14 cities are at or below a 12.2 percent uninsured rate, while five cities – Chester, Myrtle Beach, Anderson, Darlington, and Lancaster – have higher rates than 12.2 percent uninsured.

All those cities also have poverty rates way above South Carolina’s overall 14.6 percent, which, in turn, is higher than the U.S. average of 11.6 percent.

Census numbers also show that in counties where poverty rates are high – such as Marion, where 29 percent of residents live at or below FPL – rates of uninsured residents tend to increase as well. In Marion, 14.7 percent of residents are uninsured. And in Dillon County, 26 percent of residents live at or below FPL, while 17.6 percent of residents are uninsured.

But the impact of Medicaid shows up strongly when data are broken down to the city level. For example, while Dillon County has 26 percent poverty and 17.6 percent uninsured, Dillon City has 33 percent poverty, but 9 percent uninsured. The city has higher rates of residents younger than 18 and older than 64 – the two sets of people who most qualify for Medicaid coverage – compared to the county. The city also has a fifth as many military vets – who often have some level of healthcare coverage – as the county overall.

Perhaps unsurprisingly, insurance coverage tends to be lowest in South Carolina’s rural counties, such as Cherokee, Colleton, Oconee, and Georgetown, all of which have rates of uninsured residents above 15 percent. Horry is the only other county to break the 15 percent uninsured threshold.

State TANF spending. South Carolina’s medical debt problems aren’t helped by how TANF – Temporary Assistance for needy Families – gets spent.

In the most simplistic terms, TANF was a Clinton administration revamp of the Aid to Families with Dependent Children program. TANF gives states enormous discretion over how funds (block grants) intended for assistance programs for those living at or below FPL could be spent.

In his 2023 book, Poverty By America, author (and Eviction Lab cofounder) Matthew Desmond outlines how the popular belief that federal funding for programs to fight issues such as homelessness and hunger have decreased since the Reagan administration is false – federal money towards these issues has increased in the past 40 years, Desmond writes. The dollars are just not getting to people because states are either sitting on piles of money or are disbursing it to non-programmatic endeavors (this is what retired NFL quarterback Brett Favre got tied up in).

In 2021, according to the Center On Budget and Policy Priorities (CBPP), South Carolina spent $156 million in TANF money. However, as of 2021, “South Carolina has accumulated $8 million in unspent TANF block grant funds, equal to 8 percent of its block grant,” CBPP reports.

Also according to CBPP, South Carolina allots 19 percent of its TANF funds to “basic assistance” – the blanket term for programs that encompass things like cash assistance to caretaker families and other ways meant to promote social equity (including those geared towards improving health outcomes).

That 19 percent is lower than the U.S. average of 23 percent, but it is actually fairly typical. States generally spend about a fifth of their state and federal TANF budgets on child and family assistance, according to CBPP; and that’s part of a bigger trend towards less and less spending on those types of programs.

“In 2020,” CBPP wrote in a 2022 report, “for every 100 families living in poverty, only 21 received TANF cash assistance, down from 68 families when TANF was created [in 1996].”

South Carolina, however, spends a smaller share of TANF funds than the U.S. average in every category but two: pre-K education and “other services.” According to the South Carolina Department of Social Services, “other services” refers to services such as “psychological evaluations, family and group counseling, case management including home visitation, and community based assessment to determine the type of crisis intervention necessary to maintain the family or to expedite family reunification.”

They can also include services for adolescent pregnancy prevention (featuring mainly abstinence education) and statutory rape prevention (often through faith-based programs such as the South Carolina Center for Fathers and Families).

The U.S. average share spent on other services in 2021 was 14 percent; South Carolina spent 17 percent of its TANF budget on other services that year.

In 2021, South Carolina spent:

  • $29 million (19 percent of its TANF budget) on basic assistance; the U.S. average was 23 percent. This $29 million is down from $53 million spent on basic assistance in South Carolina in 2018;
  • $4 million (3 percent of its TANF budget) on childcare services; the U.S. average was 16 percent;
  • $4 million (3 percent of its TANF budget) on child welfare; the U.S. average was 9 percent;
  • Zero on tax credits; the U.S. average is 9 percent of TANF budgets;
  • $57 million (36 percent of its TANF budget) on administration and systems – money spent to administer the program itself, not money that goes towards public assistance); the U.S. average was 11 percent.

The last category, administration and systems, was the largest share of TANF money that South Carolina spent for any single category in 2021.
By comparison, Georgia in 2021 spent 6 percent of its TANF money on administrative services and North Carolina spent 11 percent. The only state to spend more of its TANF budget on administration and systems in 2021 was Delaware, which spent 48 percent in the category. The next in line was Michigan, which spent 29 percent of its TANF budget on administration and systems that year.

Also by comparison: While South Carolina has the second-highest share of residents with medical debt in collections, South Dakota has the second-lowest (about 3 percent), according to Urban Institute data. And in 2021, South Dakota spent:

  • $12 million (41 percent of its $27 million TANF budget) on basic assistance;
  • $800,000 (3 percent of its TANF budget) on childcare services;
  • $4 million (14 percent of its TANF budget) on child welfare;
  • Zero in tax credits;
  • $2 million (7 percent of its TANF budget) on administration and systems.

CBPP wrote in 2022 that states continue to use “considerable flexibility under TANF to divert funds away from income support for families and toward other, often unrelated, state budget areas.”
The agency argues that by redirecting the funds back toward cash assistance, “states could promote racial equity and child well-being.”

Scott Morgan is the Upstate multimedia reporter for South Carolina Public Radio, based in Rock Hill. He cut his teeth as a newspaper reporter and editor in New Jersey before finding a home in public radio in Texas. Scott joined South Carolina Public Radio in March of 2019. His work has appeared in numerous national and regional publications as well as on NPR and MSNBC. He's won numerous state, regional, and national awards for his work including a national Edward R. Murrow.