Daugaard won’t expand Medicaid yet, but wants options open

Gov. Dennis Daugaard will not support covering tens of thousands of low-income South Dakotans through a Medicaid expansion Tuesday.

But the Republican governor will also pointedly not rule out a future Medicaid expansion under the controversial Affordable Care Act, also known as Obamacare. Instead, South Dakota will continue to work with the federal government to seek flexibility to cover people through other means than a straight Medicaid expansion.

“It sounds like the governor may decide not to expand this year due to the uncertainty at the federal level (and mediocre state revenue),” said Sen. Deb Peters, R-Hartford, the chair of the Senate Appropriations Committee. “But we don’t want to shut the door on the discussion… We’re going to continue to pursue other options.”

Peters said her information came from discussions with top leaders in the executive branch. Tony Venhuizen, a senior advisor to Daugaard, wouldn’t directly confirm Peters’ report but said she “has been very involved throughout the decision-making process and is in a good position to know what’s in the works.”

Daugaard will formally announce his Medicaid decision Tuesday afternoon in his annual budget address. Earlier this year, he convened a task force to study the issue, and later said he was leaning against expansion.

In South Dakota, Medicaid currently covers a wide range of children, pregnant women and disabled adults. But very few non-disabled adults, no matter how poor, are covered.

The Affordable Care Act calls for states to expand Medicaid eligibility to everyone earning less than 133 percent of the federal poverty line, or $31,322 for a family of four. The federal government will pay for 100 percent of the cost for the first few years, then around 90 percent after that.

In South Dakota, that would mean about 48,000 uninsured adults could get coverage. But due to a quirk in the law, around half of those 48,000 could get health coverage anyway, even if South Dakota doesn’t expand Medicaid. Around 22,000 people, the less-poor half with incomes above 100 percent of the poverty level, could purchase subsidized private health insurance on the Affordable Care Act’s online exchanges.

That means around 26,000 stand to be left out if South Dakota doesn’t act.

Hospitals have urged South Dakota to expand Medicaid, saying right now uninsured people go to the emergency room, relying on charity care that drives up other peoples’ insurance rates. Opponents include people fiercely opposed to the Affordable Care Act as a whole, as well as people concerned about the cost to South Dakota of covering more people.

Daugaard and other Republicans have said they want more flexibility than Medicaid offers. They’ve watched states like Iowa and Arkansas, which have sought and received waivers from the federal government to pursue alternate models.

“They’ve purchased these folks’ health insurance on the market,” Peters said of Arkansas. “It’s cheaper than administering a completely new program. You only have to worry about the eligibility requirements.”

Daugaard’s office has been in contact with federal officials about these options, but hasn’t come to any agreement yet for a similar system.

State Sen. Billie Sutton, D-Burke, said he’s disappointed Daugaard won’t expand Medicaid right away. But Sutton said he’s encouraged the governor remains open.

“I was kind of under the assumption it was a closed door, in his opinion. But that’s a good sign that at least he’s considering further discussions.”

Peters said some lawmakers are resolutely opposed to any expansion, and others are passionately in favor of it.

The rest, she said, are in “the squishy middle.”

“I think we could expand Medicaid if the right opportunities exist, and if we organized it in a way that covers the people who need it the most,” she said.