S.D., feds negotiating over possible Medicaid expansion

South Dakota officials have begun informal negotiations with the federal government over a potential Medicaid expansion in the Mount Rushmore State.

Just over a month after Gov. Dennis Daugaard asked for flexibility to cover just some of the people the Affordable Care Act wants states to add to the Medicaid program, officials with the U.S. Department of Health and Human Services have reached out to learn more about what Daugaard wants to do.

"The fact that they’re asking questions at all means that they’re considering it," said Daugaard aide Tony Venhuizen, who cautioned that the discussions were "preliminary" and involved lower-level staff.

Discussions have also involved Democratic leaders in the Legislature. House Minority Leader Bernie Hunhoff, D-Yankton, said South Dakota Democrats have reached out to their contacts in President Barack Obama’s administration to encourage them to take Daugaard’s outreach seriously.

"We’re getting word from Washington that they respect our moving deadline, and they want to work with us, and work to get the best possible proposal on the table," said Hunhoff. "Hopefully that will happen within days here."

So far Republican legislative leaders haven’t yet been contacted by federal officials, but Senate Majority Leader Tim Rave said he expects conversations to happen later this week.

South Dakota has less than two weeks left in its regular legislative session. Daugaard had asked for speedy consideration of South Dakota’s request given its short legislative session.

The federal Affordable Care Act calls on states to expand the Medicaid program to cover everyone earning up to 133 percent of the federal poverty line, which is $15,521 for an individual or $31,721 for a family of four. Under the law, the federal government would pay the entire cost of the expansion until 2016, and 90 percent or more after that.

But people earning more than 100 percent of the poverty line are eligible for subsidized private insurance on the Affordable Care Act’s online exchanges. So Daugaard asked if South Dakota could expand Medicaid to cover just people up to 100 percent of poverty — $11,670 for an individual or $23,850 for a family of four.

Negotiations with federal officials haven’t yet advanced to whether those specifics might be acceptable.

"We don’t know yet if the feds will accept what the governor is proposing, or if they’ll have some kind of counter-offer," said Venhuizen.

Last week, Daugaard said he could expand Medicaid without prior authorization from lawmakers. That could be necessary even with an expedited approval process from the federal government.

It’s possible South Dakota could reach an informal Medicaid deal before its session ends on March 14. But a formal waiver request would take weeks more.

"He’ll want to have a discussion with legislative leaders about what would need to happen and how that would work," Venhuizen said of Daugaard.

Rave said Republican legislators would be open to Medicaid expansion on the right terms. But Rave was skeptical of getting anything done before the Legislature leaves town on March 14.

"It’s just awfully late," Rave said. "We need to stop and be a little thoughtful here. If it takes calling a special session in a month or two months or whatever… there’s certainly nothing wrong with calling a special session to get that right."