The next president’s biggest impact on South Carolina could be found in the future of Medicaid, the government health-insurance program for children, the poor and the disabled.

In South Carolina, the program is immense – both in dollars and impact.

Taxpayers spend $6 billion a year for South Carolina’s Medicaid program – roughly $11,000 every minute. The program covers 1.1 million people, nearly a quarter of the state’s population. About 58 percent of those covered are children. South Carolina’s Medicaid program pays for half of all births in South Carolina, and 85 percent of teen births. And Medicaid contracts with 78 percent of the state’s nursing homes and pays for 70 percent of the people in those homes.

The program also is one of the biggest contributors to the federal budget deficit – now $1.17 trillion a year, according to the Congressional Budget Office.

In conservative South Carolina, reducing that deficit is the top priority for many voters. But that can’t be done without changing Medicaid. President Barack Obama and Republican candidate Mitt Romney both want to spend less on the program – but in different ways, ways that will have a big impact on South Carolinians on Medicaid, and the doctors and hospitals who serve them.

The federal government pays for a portion of the program in each state. The poorer the state, the more money the federal government gives to that state. South Carolina has the fifth-highest federal contribution rate in the country – meaning the Palmetto State is so poor that it is unusually dependent on the program.

Romney wants to change how the federal government pays for its share of the program. Right now, the government pays a matching rate. In South Carolina, that is 70 percent of the program’s cost, regardless of what the total cost is.

Romney wants to turn Medicaid into a grant program. Under this scenario, states would get a specific amount of money – and no more. In return, states would have more flexibility in deciding what medical procedures to cover.

The Congressional Budget Office estimates one version of this approach could save $287 billion over 10 years – a 25 percent cut in federal Medicaid spending.

Romney’s plan for Medicaid

This idea is popular with Republican governors, including S.C. Gov. Nikki Haley.

“We’re not going to shove more South Carolinians into a broken Medicaid system that further ties our hands when we know the best way to find South Carolina solutions for South Carolina health problems is through the flexibility that block grants provide,” Haley spokesman Rob Godfrey said in an email to The State newspaper. “As the governor has said, block grants hold the state accountable for improvements in health but free us from useless federal red tape.”

This approach could work in South Carolina, but only if state officials are successful in negotiating the right amount of money from the federal government, said Robby Kerr, the state’s Medicaid director under former Gov. Mark Sanford.

“If you receive a block grant and get capped at what you have now with very little inflationary growth ... you are going to box yourself in,” said Kerr, now a lobbyist. “If you receive a block grant with good flexibility and very adequate inflation factors, you will succeed.”