Gov. Dennis Daugaard wants to expand Medicaid in South Dakota under the Affordable Care Act — but only part of the way, and only if the federal government lets him, which some experts say is unlikely.
Daugaard, with support from legislative leaders in both parties, has sent a letter to federal Health and Human Services Secretary Kathleen Sebelius asking for permission to cover people earning up to 100 percent of the poverty line in the Medicaid program. The health care law calls for states to expand Medicaid up to 133 percent of the poverty line, and foot most to all of the bill.
"The one-size-fits-all approach that’s offered by the Affordable Care Act really doesn’t match up with the beliefs of most South Dakotans that we want to help those who can’t help themselves, and those who can help themselves should," Daugaard said Friday.
If Daugaard gets his way, people earning up to 100 percent of the poverty line — $11,670 for a single adult or $23,850 for a family of four — would be eligible to enroll in Medicaid.
People earning between 100 percent and 133 percent of the poverty line could — as they can now — buy health insurance on the Affordable Care Act’s online exchanges and receive substantial subsidies to offset those costs.
Last year, Daugaard asked Sebelius informally if she would approve such a solution, and was told no. But he believes that with other states getting waivers to pursue alternative Medicaid expansion approaches, the answer might be different this time.
"This is a dynamic situation," Daugaard said Friday. "I think the federal government may be more open to considering things like that. Certainly I want to keep that conversation going."
Under the Affordable Care Act, the federal government promises to pay almost the entire cost of Medicaid expansion for the first several years for states that do so, then 90 percent or more of it into the future.
Robin Rudowitz, associate director for the Kaiser Commission on Medicaid and the Uninsured, said the federal Centers for Medicare and Medicaid Services have warned states away from partial expansions.
"CMS has issued guidance related to waivers, and what waivers might be eligible for the 100 percent (federal) matching funds," Rudowitz said. "Their guidance is that these partial expansions would not be eligible for the 100 percent matching funds."
Wisconsin, in fact, just recently pursued a Medicaid expansion up to 100 percent of the poverty line, leaving those over the poverty line to join the exchanges. But the federal government isn’t paying the full cost of the expansion, as it is for states that went the whole way. Instead, that expansion happened under the normal Medicaid formula, where the federal government pays for just over half the cost.
Other states with waivers, such as Arkansas and Iowa, agreed to provide health care coverage up to 133 percent of the poverty line. They received flexibility to provide that care in other ways, using Medicaid money to instead support their residents’ private insurance on the exchanges.
Nationally, 25 states and Washington, D.C., have expanded Medicaid. Several others are considering it.
If Daugaard receives a swift response, he said he’s willing to amend his proposed 2015 budget to include Medicaid expansion for next year.
Democrats in the Legislature have long urged Daugaard to expand Medicaid. They say the low-income uninsured need health coverage, and that the federal funding would bring hundreds of millions of dollars into the state’s economy.
House Democratic leader Bernie Hunhoff, D-Yankton, said he believes a full expansion is the best course but is willing to support a partial expansion.
"Anything we can get on the table is a good step forward," Hunhoff said. "Politics is the art of the possible… I don’t think a partial expansion should limit us from continuing to pursue full expansion down the road."
Daugaard, along with most Republican lawmakers, has resisted expansion. The governor has worried the federal government could renege on its promise to pay most of the cost. And he says he doesn’t want to create more people dependent on government aid than is necessary.
But Daugaard has never ruled out Medicaid expansion, saying he just wants to be cautious.
Senate Republican leader Tim Rave, R-Baltic, said he sees a partial expansion as a good, practical approach.
"Members of leadership in the Republican side have been talking at length about how we could find a common-sense, conservative approach to Medicaid expansion," Rave said Friday. "I believe that we’ve come up with a fairly good approach and are looking forward to that discussion."
Outside groups that have been pushing for Medicaid expansion say they’re happy to see Daugaard’s letter but are uncertain about its chances for success.
"We would be supportive of any programs that have a credible chance of being accepted by the federal government," said Dave Hewett, president and CEO of the South Dakota Association of Healthcare Organizations. "The ability to have a budget that allows for the state to move forward sooner rather than later on expansion is a good thing."