A Critical Medicaid Test Awaits South Carolina’s Next Governor

The Post & Courier
By: Stan Soloway, CAMI Board Chair

The candidates competing to replace Gov. Henry McMaster this November have staked their campaigns on familiar ground, including education, infrastructure, and pocketbook issues.

None of the candidates, however, have seriously spoken to the Medicaid provisions that the One Big Beautiful Bill enacted a year ago.

These provisions require states to newly offer work or volunteer requirements for able-bodied adults, as well as mandatory requirements to confirm enrollee personal information and prevent simultaneous enrollment across states, and meet new error-rate standards that carry fiscal penalties if not met.

With the first implementation deadlines slated to take effect this January, the very same month South Carolina’s next governor will be sworn into office, few issues deserve more attention by gubernatorial candidates than Medicaid implementation.

South Carolina has an advantage which will make implementation more manageable. As one of the few states that did not expand Medicaid under the Affordable Care Act, the state carries a comparatively smaller Medicaid enrollment base, making implementation more manageable. In addition, the work requirements only fall on the Medicaid expansion population. The advantages, though, end there, as the state’s next governor will also inherit outdated eligibility and claims systems stemming from years of deferred modernization. 

In its assessment of South Carolina's Medicaid Enterprise System, a research firm found that after the state's administrative services contract with Optum was cancelled, work to replace the state's forty-year-old Medicaid claims system effectively stopped, and the agency was left without direction for its modernization push. Worse yet, the same firm found member records spread across five separate systems with no single source of truth, no automated synchronization among them, and duplicate enrollee records identified and merged largely by hand.

Compounding this problem is South Carolina’s rapidly growing population. The Palmetto State recorded the highest population growth rate in the nation last year, adding more than 90,000 new residents, and has ranked in the top six in population growth among all states each of the last five years. This explosive growth puts added pressure on Medicaid enrollment, meaning any administrative weaknesses or gaps in the system will only be further magnified by the tens of thousands of new enrollees. 

If South Carolina doesn’t tackle these issues head-on, the state will have to face new error-rate benchmarks that carry hefty fines which remain entirely avoidable if the new governor handles modernization correctly.

South Carolina also has the added advantage of learning from the missteps and successes of its neighbors, Georgia and North Carolina, in implementing new Medicaid provisions.

Georgia was the first state in the country to launch a Medicaid work requirement program during President Trump’s first term, and was touted as a national model until a 2025 report from the nonpartisan Government Accountability Office found the state’s Pathways program spent $54.2 million on administrative costs between 2020 and 2025. That's more than twice what it spent on actual health care coverage for the very few low-income adults who signed up. Georgia's implementation failed largely because it outsourced essentially the entire program to contractors who built both an expensive and ineffective data management system which ultimately enrolled very few eligible individuals.

Conversely, when North Carolina expanded Medicaid, it did not default to a massive government hiring surge, nor did it outsource all of the work to the private sector. Instead, the Tar Heel State worked closely with trusted and proven contractors, leveraging their expertise while maintaining strong state oversight and accountability, leading to one of the smoothest rollouts in the country.

If South Carolina’s next governor prioritizes this implementation challenge and enters office equipped with a plan to tackle it, the state can prove that even programs constrained by outdated systems and fragmented processes are capable of meeting OBBBA’s burdensome Medicaid requirements and, in doing so, provide a concrete example other states can follow.