S.C. attorney general to probe constitutionality of Senate healthcare bill's Medicaid provision

South Carolina Attorney General Henry McMaster on Wednesday announced he would probe the legality of alleged "sweetheart deals" in Senate Democrats' healthcare bill.

The forthcoming investigation is a response to concerns aired earlier this week by Republican Sens. Lindsey Graham and Jim DeMint. In a letter to McMaster, sent on Monday, the lawmakers questioned the constitutionality of Democrats' decision to cover all of Nebraska's future Medicaid recipients in an attempt to court Sen. Ben Nelson's (D) vote.

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The two lawmakers demurred that exemption could be illegal, McMaster agreed with the premise of their letter and he subsequently said in his own statement on Wednesday he would lead an investigation into the so-called deal, beginning immediately.

"The language of the Nelson provision appears to give the State of Nebraska a permanent exemption from paying the Medicaid expenses all other states in the nation will be required to pay," the attorney general said. "In other words, if this amendment stands, taxpayers from South Carolina and other states will be paying the bills for the increase in Nebraska's Medicaid population."

"Quite obviously, this issue raises very serious concerns about equity, tax fairness as well as the constitutionality of having federal tax levies and mandates that treat one state differently from all the others," McMaster added. "If the Nelson provision is not unprecedented, I feel comfortable in saying it is an exceptionally rare occurrence. States generally are treated in a similar manner."

It is hardly surprising that Nelson's coup -- complete Medicaid funding for new patients -- would sit well with neither Republicans nor their states. Senate GOPers fret Nelson's decision to vote with Democrats on their healthcare bill, and the states they represent are nearly apoplectic that Nebraska is receiving considerably more Medicaid money than they are.

That last point is especially resonant this year, given that nearly every state faced a serious budget shortfall that is expected only to worsen by 2011. An expansion of Medicaid means each state must commit more funds to the entitlement program, and a number of those states -- perhaps South Carolina included -- maintain they do not have the dollars to spare.

"In the case of South Carolina, who will be required to provide state matching funds, additional millions of state dollars will be needed to cover thousands of new enrolees," Graham and DeMint wrote on Monday. "As we analyze the budgetary impact over the next decade, the cost to South Carolina taxpayers could be increased by over $1 billion by 2019."

Consequently, Graham and DeMint stressed Nebraska's deal possible qualifies as "special treatment" -- a sentiment with which AG McMaster concurred on Wednesday.

"In my judgment, Democrats and Republicans alike from every state in the union should be outraged by this deal," he said. "Medicaid is a joint federal-state program but in this instance one state -- Nebraska -- will be able to shift its future funding obligations back onto the federal government."