Feds drop investigation into Haley’s misuse of health care reform funds

The federal government has dropped its investigation of South Carolina Gov. Nikki Haley for bilking the feds out of nearly a million dollars in health care funding, but the conflict over insurance reform continues as state leaders seek to block meaningful change from being made to the Palmetto State’s health care system.

Early last year, Haley accepted a million dollars in federal funds which was intended to help the state study how to set up its own health care exchange. But emails later showed that Haley told the study committee beforehand to recommend against the exchanges, prompting Sen. Tom Harkin of Iowa to request an investigation into the governor’s motives.

According to Harkin, federal investigators determined that the committee’s report still holds “potential value to the federal government in helping to ensure that South Carolinians have access to affordable quality health care through an insurance exchange.”

But what exactly does that mean? It’s already clear that South Carolina officials intend to block any attempt to set up a state insurance exchange, meaning the state will be forced to join the federal exchange South Carolina doesn’t enact its own exchange by 2014. According to health care reform advocates, that means hardship and high costs for South Carolinians who hope to buy health insurance without being screwed by their provider.

As Politico’s J. Lester Feder reports, Gov. Haley doesn’t have to do a whole lot to prevent health care reform from being enacted in the Palmetto State:

For the resistant states, in contrast, obstruction wouldn’t require lifting a finger. To block the federal exchange, they could just do nothing. And if they don’t make the legally required changes in state programs — such as Medicaid — to coordinate with the federal exchange, the federal exchange can’t work.

However, the federal Department of Health and Human Services has a range of options that could entice rogue states into complying with federal law, such as cut off the state’s Medicaid funding:

HHS [also] has the power to essentially usurp a state’s power to regulate insurance if it won’t enforce federal law. And people in a state without an exchange wouldn’t get the new premium subsidies available under the health care law. That could prove politically unpopular once the dollars start flowing to help people get insurance in other states.

Of course, Gov. Haley still isn’t in the clear as far as investigations are concerned. As the Free Times’ Corey Hutchins reports, Republican power-broker John Rainey’s lawsuit against the governor moved forward this week. Rainey, who has called Haley “the most corrupt person to occupy the Governor’s Mansion since Reconstruction,” is suing to discover whether Haley illegally lobbied for her employers while serving as a state representative:

Rainey’s lawsuit also alleges that Haley filed false claims on her ethics reports, failed to disclose her association with lobbyists; neglected to disclose conflicts of interests when voting on bills; illegally voted to benefit a business she was associated with; and used her office to solicit money from lobbyists.

Additionally, the feds are also rumored to be investigating allegations of money-laundering connected to Haley’s campaign financing and the Sikh temple at which her parents worship. So it’s probably still best to keep the ol’ lawyer on speed dial.

Related Posts:

• On Record: SC Senate poised to give state power to take over Medicare
• SC Medicaid director accidentally disproves Gov. Haley’s rationale against expanding Medicaid
• UPDATE: Exchange on exchanges meant SC’s chance for health reform was DOA
• Nikki Haley joins Jim DeMint’s bid to nullify health care law
• Haley says no to state health insurance exchange, turning program over to the feds