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Gov. Kristi Noem, state departments begin process to implement 'will of the voters' in Medicaid expansion

After passing with 56% of the vote, offering Medicaid benefits to an expanded population is now a part of the state constitution. Here's what state officials have to do to meet the July 1 deadline.

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House Speaker Hugh Bartels stands to applaud during Gov. Kristi Noem's budget address on Dec. 6. Part of the new spending in Noem's budget was $13 million this year to begin implementing the Medicaid expansion passed by the voters on Nov. 8, 2022.
Jason Harward / Forum News Service
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SIOUX FALLS, S.D. — With language now etched into the South Dakota State Constitution requiring the state to provide Medicaid benefits to an expanded eligibility group, Gov. Kristi Noem and the state legislature are indicating they will implement the amendment as written.

“The legislature's hands are tied,” said Rep. Kevin Jensen, who will chair the House Health and Human Services Committee this coming session. “Because of the constitutional amendment, we can't do anything to change or restrict it other than pass another amendment. So the legislature, as far as I can see, our only role will be to either vote for the funding bill at the end of the year or vote against it.”

Timeline requires enrollments by July

The language of Initiated Amendment D, which passed with 56% of the vote on Nov. 8, makes clear the general process ahead of the Department of Social Services, which will oversee the expansion of Medicaid to adults between the ages of 18 and 64 with incomes below 138.5% of the federal poverty line.

By March 1, 2023, the department must submit an amended state plan to the federal divisions that oversee Medicaid. In a statement to Forum News Service, Laurie Gil, the secretary of the state Department of Social Services (DSS), said these amendments “will establish eligibility, benefits, and the delivery system for the expansion population.”

The amendment then requires that the program begin accepting applications and conferring these benefits on July 1, 2023.

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“DSS currently anticipates accepting applications in July 2023, and we plan to communicate a more specific date for accepting applications in late spring 2023,” Gil wrote in the statement.

As currently constructed, the federal government covers 90% of health care costs incurred by those in the expansion population — according to the Bureau of Finance and Management, 52,000 South Dakotans are expected to be eligible for the program.

During the first two years of expansion, the federal government offers states a boost in funding as an incentive; these incentives are estimated to total $53 million in the first year.

On top of these incentives meant to offset parts of the initial cost, Noem during her budget address on Dec. 6 proposed an appropriation of just under $13 million in the first year of expansion.

The budget, which features a topline dollar figure of $7.2 billion, makes investments in state employees, providers and the state's correctional infrastructure. Noem will look to push her proposals through the legislature, which has final say on all spending matters.

The Bureau of Finance and Management says this will cover an additional 68 full-time DSS employees to administer expansion and “includes additional contingency funding on both healthcare cost and projected enrollment.”

Opposition could inform legislative actions

Even in appropriating those dollars, Noem continued to make clear her opposition to the program itself.

“Make no mistake, the expansion of Medicaid — as passed on the November ballot by the people of this state — is an expansion of a government program that will give free healthcare to a population of the state that the majority are able-bodied, single males,” Noem said.

While this statement is generally true when looking at state-level data (in Maine, for example, more than 86% of enrollees as of Oct. 1 are childless adults, 54% of whom are male), some legislators think that the economics of the program still make sense for the state.

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“From a practical standpoint, these folks are the working poor,” said Sen. Sydney Davis, who will serve as the vice chair of the Senate Health and Human Services committee this session. “They have no resources for preventative health care, so they end up in the emergency room, with conditions that could have easily been prevented, and that is likely to now be more costly.”

Noem disagrees, saying during her speech that “costs exceeded their expectations” in every other state that has expanded Medicaid, a point that several legislators concur with. Noem estimated that, in the fifth year of implementation, the state would bear a cost of $80 million.

“A lot of people fear it could lead to a state income tax because at some point it's going to cost us $100 million per year,” Rep. Kevin Jensen said.

Although enrollment does often exceed expectations, several states report savings in other areas of the general fund that make up for part of these overruns. In Montana, for example, direct savings from Medicaid expansion in 2021 totaled $27 million, largely from new federal dollars covering other state expenses

South Dakota’s Legislative Research Council estimated these savings at around $11 million per year, with the offsets mainly coming from “correctional healthcare, behavioral healthcare, and Indian Health services.”

Another concern for legislators is the potential for the federal government to change its end of the 90-10 cost share, which would not change South Dakota’s constitutional mandate and would simply increase the cost borne by the state.

Sen. Jean Hunhoff, the chair of the appropriations committee in the Senate, told Forum News Service in November that it might be wise for the state to save some of the federal dollar incentives coming into the state during the first two years to cover this potential risk.

“We would have to pick up all that extra that [federal dollars] were no longer picking up,” Hunhoff said. “I think we have to see how we can manage those dollars that are coming in and make sure those dollars go into a fund that is to cover a Medicaid expansion group.”

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An additional ancillary appropriation that could increase enrollment would be some amount of one-time funding for outreach and education. While Shelly Ten Napel, the executive director of the Community HealthCare Association of the Dakotas, said efforts like these have had “really significant impacts” on enrollment rates in other states, the stomach for this sort of appropriation might be lacking.

“I really don't see an appetite for it in the state legislature,” Davis said. “I think my colleagues will see that as a cost in addition to something that is already costing money.”

Though related appropriations are still speculative, Rep. Greg Jamison, a Republican who was a vocal proponent of expanding Medicaid, is certain that the legislature will at the very least appropriate the $13 million requested by the governor.

“There are a lot of my Republican friends who are not happy with it, and they may think that they could stop it or defund it or something, but they'll realize that that's not possible,” Jamison said. “The governor seemed a little bit begrudging but she played it pretty safe and did say it's the will of the voters, so she definitely understands that.”

MORE BY JASON HARWARD
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Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or jharward@forumcomm.com.

Jason Harward covers South Dakota news for Forum News Service. Email him at jharward@forumcomm.com.
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