Cuts to Medicaid, as outlined in the One Big Beautiful Bill (OBBB), are not expected to have an outsized effect on South Carolinians who use Medicaid. That’s because South Carolina is one of 10 states to not have expanded Medicaid under incentives from the Affordable Care Act. Expansion states expect to see large numbers of recipients fall off Medicaid rolls, as those rolls expanded access to more people.
That is not to imply that South Carolina will necessarily fare better than other states. According to United Health Foundation, 9.1 % of South Carolinians – roughly 468,000 residents – were uninsured in 2023. That ranked the state 38th in the nation.
That same year, the state overall ranked in the bottom 10 for physical health, mortality, and access to care.
Still, any cuts coming to Medicaid recipients from OBBB are expected to disrupt South Carolina’s patients less than in expansion states.
At the provider level, however, small – especially rural – hospitals are more concerned.
“In January of 2028,” said Allendale County Hospital CEO Lari Gooding, “state-directed payments are going to start getting cut, which means that Medicaid reimbursement is going to get cut.”
State-directed payments are funds from the federal government to state governments, which have then used the money through the State-Directed Payment Program to reimburse hospitals for Medicaid clients whose payments fall short of the full cost of care.
Starting in 2028, funds to the program will be cut 10% per year for 10 years. Nationwide, that spells a potential reduction of $793 billion in Medicaid spending by 2038, according to KFF – which also calculated that South Carolina could lose as much as $5 billion and have as many as 60,000 fewer Medicaid enrollees over that time.
“Since our state used the provider tax and state-directed program approach to support Medicaid, the hospitals have been, across the state, financially viable,” said Thornton Kirby, CEO of the South Carolina Hospital Association. “Now that that has been threatened, [hospitals] are moving back into the survival mindset – ‘Uh-oh, what do I need to do to make sure I … avoid laying off staff and narrowing our service offerings?’”
These are the questions Gooding is asking at Allendale County Hospital – one of the few independent hospitals still left in South Carolina, and one of the least financially flush.
“Small, rural hospitals operate on very thin margins anyway,” Gooding said. Allendale’s profit margins are near zero. “And so now to say that the cost [of care] is going to continue to go up but now reimbursement's going to go in the opposite direction, there’s just no way to sustain a hospital like that.”
Allendale Hospital operates in one of the state’s smallest, poorest counties, where three in four hospital patients are either self-pay or covered by Medicaid, Gooding said. Mostly, it operates as an emergency room, but does no surgeries, maternity, or advanced care.
“Most of our business is through the ER because people are sick,” Gooding said. “We don't get a lot of referrals. We can't take care of the patient in the hospital because they're on dialysis. Somebody goes out for orthopedics or general surgery or cardiology, it goes to different hospital and those hospitals are getting business from hospitals like us.”
With newly revamped Hampton Regional Medical Center, which also has an ER and is part of the Medical University of South Carolina system, 13 miles away, Gooding worries that as operating budgets get larger and the funds to pay for those budgets get smaller, there will come a time in the next decade that hospitals like Allendale County might not be around.
While Kirby says it’s too early to predict hospital closures, he does worry that small, rural hospitals, affiliated or not, will have to make some tough choices in the decade ahead.
According to a White House memo, OBBB does factor in the effects of rural healthcare. One of the provisions of the bill is a five-year, $50 billion investment in rural communities, beginning in 2026.
According to the memo, the Rural Health Transformation Program seeks to “hold states accountable to this plan to ensure resources are delivered to the most deserving care providers and their patients, not the most politically well-connected.”
Critics of OBBB cite that projected losses to Medicaid dwarf the investment intended.
Maya Pack, executive director of the South Carolina Institute of Medicine and Public Health, says that while it’s too early to know what the effects of OBBB will really be on rural hospitals, she’s had conversations with healthcare leaders in the state who say they’re dubious that the Rural Health Transformation Program investment can really fill the gaps federal cuts will bring.
“Most folks looking at it think that those funds in the rural fund are not going to be adequate enough to offset the cuts,” Pack said. “But a lot of folks are doing a lot of analysis right now, and the results of that could prompt our state to take some sort of action. I think leaders in our state recognize the value of rural hospitals maintaining their services and staying open.”
State Sen. Tom Davis (R, Beaufort) said that while he feels it’s too early to expect the sky to completely fall in, “50 state legislatures,” come January, are going to be looking for ways to make sure rural hospitals can stay funded and open.
Davis said he wants to hold hearings next legislative session with healthcare leaders to find some pathways forward, and to hear from South Carolinians who will have trouble accessing healthcare, so that solutions could be “based on data and not speculation.”
