South Dakota and the ACA’s Medicaid expansion

State seeks federal approval for Medicaid work requirement pilot program; Medicaid advocates collect signatures to get expansion on 2022 ballot

Has South Dakota implemented Medicaid expansion?

South Dakota has not yet accepted federal funding to expand its Medicaid program, so eligibility rules in the state remain the same as they were prior to the Affordable Care Act (ACA). Former Governor Dennis Daugaard supported Medicaid expansion by 2015 (after initially opposing it), but the issue did not have lawmakers’ support. Current Governor Kristi Noem is opposed to Medicaid expansion. Instead of expanding Medicaid, South Dakota is seeking federal approval for a work requirement for low-income parents in the existing Medicaid program. The waiver application is for a pilot program that would be rolled out in Minnehaha and Pennington Counties, with the option to expand into other areas of the state in the future.

In the 2022 election, South Dakota voters may get to decide whether the state expands Medicaid

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Most of the states that have expanded Medicaid have done so via legislation. But as time goes on and lawmakers and/or governors in a dwindling minority of the state continue to reject federal funding to expand Medicaid, the issue is increasingly being taken directly to voters. Medicaid expansion has already taken effect in Maine, Utah, and Idaho as a result of ballot measures that were approved by voters. A similar ballot measure will result in expanded Medicaid in Nebraska as of October 2020, and voters in Oklahoma approved Medicaid expansion on their June 2020 primary ballot, with coverage that will take effect no later than mid-2021. Voters in Missouri will also have an opportunity to vote on Medicaid expansion on their August 4, 2020 primary ballot.

And now South Dakota is the latest state where voters may eventually get the opportunity to determine whether Medicaid is expanded in the state under the terms laid out in the ACA. In July 2020, South Dakota Attorney General Jason Ravnsborg published explanations for two petitions that will be circulated in the state in an effort to gain enough signatures to get on the 2022 ballot. Both call for Medicaid expansion in South Dakota under the terms of the ACA — one would create a constitutional amendment (like the ballot approach that Oklahoma used) and the other is an initiated measure that would direct the state legislature to expand Medicaid.

The proposals are sponsored by Rick Weiland, a former U.S. Senate candidate and former regional director of FEMA. Medicaid expansion advocates in South Dakota have until November 2021 to gather enough signatures to get the measures on the 2022 ballots. They need almost 17,000 signatures to get the initiated measure on the ballot, and almost 34,000 to get the constitutional amendment on the ballot. Either measure, if successful, would result in expanded Medicaid in South Dakota. Both ballot initiatives call for the state to submit a state plan amendment to the federal government within 90 days of passage, detailing the state’s plan for the expansion of Medicaid.

For now, South Dakota is one of 13 states that where Medicaid has not been expanded. Low-income childless adults without a disability are ineligible for Medicaid regardless of how low their income is, but they’re not eligible for premium subsidies to offset the cost of private coverage unless their income is at least 100 percent of the poverty level. This leaves an estimated 14,000 low-income South Dakota adults in the coverage gap, with no access to any financial assistance with their health coverage. If Medicaid is expanded as called for in the ACA, a single person would qualify for Medicaid in South Dakota with an income of up to about $17,600 (that number increases a little each year as the poverty level rises).

Polling indicates that voters in South Dakota are in favor of Medicaid expansion. A non-scientific poll being conducted by Sioux Falls newspaper the Argus Leader had 490 votes as of October 2016, and 81 percent of them were in favor of Medicaid expansion. The South Dakota State Medical Association is also pushing for Medicaid expansion in the state.

Does South Dakota have a Medicaid work requirement?

Instead of an effort to expand Medicaid, South Dakota wants to implement a work requirement for low-income parents in the existing Medicaid population. Governor Dennis Daugaard laid out the details in his State of the State address in January 2018, and the state published the proposed waiver application in May 2018 (and did not provide some crucial details to enable to public to accurately comment on the proposal).  After the state’s public comment period, the waiver application was sent to HHS, where it was deemed complete and is still under review nearly two years later.

Work requirements were a non-starter under the Obama administration, but the Trump administration has approved them in several states, and several other states have pending work requirement waivers. As of mid-2020, however, there are no work requirements in effect anywhere in the country. Some have been overturned by court rulings, others have been paused while awaiting the outcome of legal challenges, and some have been abandoned amid the COVID-19 pandemic and the widespread unemployment it has caused. The future of Medicaid work requirements is uncertain at best, but the Trump administration has asked the Supreme Court to intervene and allow the work requirement in Arkansas to be reinstated (it was the first one that took effect, but was overturned by a judge the following year).

South Dakota’s waiver proposal would roll out a Medicaid work requirement (the Career Connector program) for low-income parents/caretakers (non-parents/caretakers are not eligible for Medicaid in South Dakota regardless of how low their income is, because the state hasn’t expanded Medicaid) as a pilot program in the two most populous counties in the state: Minnehaha and Pennington. The state chose those counties because of their population and access to job training and employment opportunities.

Then-Governor Daugaard’s 2018 State of the State address did not mention Medicaid expansion, other than to point out that since the state has not expanded Medicaid, the existing Medicaid population is mostly exempt from a work requirement. There would be exemptions for children, the elderly, parents caring for children under the age of 1, pregnant women, and disabled individuals.

To be in compliance with the work requirement, non-exempt parents would have to work at least 80 hours per month. The state projects that 1,300 people would be in the Career Connector program annually, and that about 15 percent of those participants would lose their eligibility for Medicaid each year. The state estimates that “the majority” of the people who lose Medicaid eligibility would do so because of an increase in income, but that a “small number” would lose their Medicaid coverage due to “choosing not to participate in the program.” People who lose coverage due to an increase in income would be eligible for a year of transitional Medicaid coverage and an additional year of premium assistance.

How many South Dakotans are enrolled in Medicaid?

There are about 109,000 people enrolled in Medicaid in the state, but most of them would not be subject to a Medicaid work requirement, since the state has not expanded Medicaid (ie, virtually everyone in the South Dakota Medicaid program is also eligible for an exemption from the work requirement). Coverage under Medicaid is only available in South Dakota for those with low income who are either children, elderly, pregnant, disabled, or very low-income parents/caretakers of minor children (parents are only eligible with household income up to 58 percent of the poverty level, which works out to just over $12,000 a year for a household with three people). Children comprise more than two-thirds of the state’s Medicaid population.

So essentially, the only people who would be subject to the work requirement are the parents who aren’t already working (or caring for a child under the age of 1), which amounts to a tiny fraction of the state’s total Medicaid population. And limiting the waiver proposal to a pilot program in Minnehaha and Pennington counties further reduces the total number of people who would initially be subject to the work requirement.

Obviously, young children need childcare well beyond the age of 1. Daugaard’s State of the State address noted that “for those families whose income goes up, we will provide interim resources such as child care assistance and premium assistance to support families as they transition off Medicaid.” The waiver proposal notes that households subject to the Career Connector requirements would also be eligible for childcare assistance, and that “participants receiving childcare subsidy will be provided with [childcare] copayment assistance so as income increases, and child care out of pocket costs increase, the transition is gradual instead of immediate.”

South Dakota began voluntary enrollment in the Career Connector program in July 2018. Mandatory enrollment in Minnehaha and Pennington counties will begin if and when HHS approves the state’s waiver proposal.

No Medicaid expansion, despite Governor’s expansion proposal in 2015

In December 2015, Governor Daugaard explained the details of his $4.8 billion budget proposal, including his proposal to expand Medicaid to cover 55,000 people who aren’t currently eligible. Daugaard said that the state should “seize the opportunity” to use federal funding to expand coverage, if possible. Nearly five years later, however, South Dakota has not moved forward with Medicaid expansion.

Although states that expanded Medicaid are paying 10 percent of the cost (as of 2020; it will remain at that level in the future), Daugaard noted that his proposal would end up being a financial net-positive for the state. That’s because he was working with the federal government and Native American tribal leaders to use Medicaid funding for Native Americans who are eligible for expanded Medicaid and who receive treatment outside of Indian Health Services (IHS) facilities. Those costs are covered in part by the state, and Daugaard said that South Dakota would save more there than they would spend on their portion of the Medicaid expansion costs. Daugaard said that he wouldn’t continue his push for Medicaid expansion if it ended up needing additional money from the state’s general fund.

In February 2016, HHS agreed to establish arrangements under which non-IHS providers could enter into “care coordination agreements” with IHS facilities, and Native Americans enrolled in Medicaid would be able to receive care at those non-IHS facilities and the full cost would be covered by federal Medicaid funds (as opposed to the state paying a portion and the federal government paying a portion). But Daugaard noted that the practical implementation of the new HHS provision could be complicated, and that there was still work to be done to determine whether the savings from the new IHS rule would save enough money to make Medicaid expansion budget-neutral in South Dakota.

A few days later, Daugaard said that it was too late in the 2016 legislative session to get the ball rolling on Medicaid expansion, and said that he would remove Medicaid expansion from his proposed budget. He indicated that a special session was a possibility, but that waiting until the 2017 legislative session was also a possibility. In June 2016, Daugaard confirmed that the issue would have to wait until the 2017 legislative session, as he was opting not to call a special session in 2016.

In early 2017, in his State of the State address, Daugaard noted that he was optimistic about working with the Trump administration to ensure that the federal government would begin to fully fund medical care for Native Americans, regardless of where the care was provided, without requiring “health care providers to jump through several hoops,” as he believed the Obama-era arrangement did. He did not mention Medicaid expansion in that address.

The issue of Medicaid expansion was essentially off the table in South Dakota as of early 2017. The coalition tasked with recommending how the state should expand coverage updated their conclusions in December 2016 to note that Governor Daugaard was no longer recommending Medicaid expansion for 2017, in light of the incoming Trump administration’s plans to overhaul Medicaid nationwide with block grants or per-capita allotments. Ultimately, that did not come to pass at the federal level, but no progress has been made towards Medicaid expansion in South Dakota in the meantime. Kristi Noem took office as governor in 2019, and opposes Medicaid expansion.

Governor’s 2015 expansion proposal got initial approval from HHS

South Dakota officials announced in September 2015 that their new proposal to expand Medicaid had received “an initial ‘go ahead'” from HHS. Governor Daugaard’s senior advisor Kim Malsam-Rysdon noted that the plan was still preliminary, but it appeared promising and would expand eligibility to far more people than the state’s 2014 proposal, which would only have expanded coverage to residents with incomes below the poverty level (HHS rejected that proposal, as Medicaid expansion capped at the poverty level was a non-starter under the Obama administration, and was also rejected by the Trump administration when proposed by Utah).

Of the population that would have been newly eligible for coverage under Medicaid expansion, more than a quarter—about 14,000 people—are Native Americans, although Native Americans make up just nine percent of the South Dakota population. Native Americans are disproportionately impacted by the state’s refusal to expand Medicaid. And although they are eligible for free care through Indian Health Services, the treatment options are limited at those facilities. The approval from HHS to allow non-IHS providers to enter into care coordination agreements with IHS facilities was expected help to open up treatment options for Native Americans with Medicaid coverage, with full funding from the federal government, but Daugaard had noted that it’s a complicated process, and not all providers enter into those agreements.

What is the impact of not expanding Medicaid South Dakota?

For the time being, Medicaid has not been expanded in South Dakota. Premium subsidies for private plans purchased through the exchange are only available for households with incomes between 100 percent and 400 percent of poverty level, so no financial assistance is available for people living below the poverty line in South Dakota.
According to state officials, roughly 26,000 people are in this “coverage gap” in South Dakota—ineligible for Medicaid and also without realistic access to private insurance, since they would have to pay the entire premium themselves on an income that’s under the federal poverty level (Kaiser Family Foundation data puts the coverage gap population in South Dakota at just 14,000).

Unless South Dakota expands Medicaid, the state will forfeit $2.1 billion in federal funding over the next decade. States that do not expand Medicaid are essentially subsidizing those that do, since the federal tax dollars come from all states but are flowing to those that have expanded Medicaid.

Who is eligible for Medicaid in South Dakota?

South Dakota’s Medicaid program became effective in October 1967, nearly two years after Medicaid was created. For many states, 2014 represented a significant shift in eligibility, particularly for childless adults. But in South Dakota, eligibility guidelines have not yet changed under the ACA. Non-disabled childless adults are ineligible for Medicaid, regardless of how low their incomes are. The South Dakota Medical Assistance Program (Medicaid and CHIP) is available to these legally-present residents:

  • Pregnant women with household incomes up to 133 percent of poverty.
  • Children with household incomes up to 204 percent of poverty are eligible for CHIP (Children’s Health Insurance Program).
  • Parents with dependent children are eligible with incomes up to 58 percent of poverty.

How do I apply for Medicaid in South Dakota?

You can apply at at any time — Medicaid enrollment is available year-round.  For people with access to the internet, this is probably the easiest way to enroll.  You can also apply over the phone with by calling 1-800-318-2596.<
Paper applications for Medicaid and CHIP can also be downloaded from the South Dakota Department of Social Services website.  The application must then be mailed, faxed, or taken in person to a local Social Services office.  If you have questions, you can reach the SD Department of Social Services at 605-773-3165.

Enrollment changes over time

Enrollment in South Dakota’s Medicaid program is lower in 2020 than it was in 2013. Because the state has not expanded Medicaid, enrollment has not grown the way it did in other states. There were 109,178 people enrolled as of early 2020, which was 5 percent lower than the enrollment total had been in 2013. Enrollment has likely increased in mid-2020 however, as a result of the job losses people have experienced due to COVID-19.

Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.

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How to apply in SD

Apply year round through or by phone at 1-800-318-2596. Download applications for Medicaid and CHIP from the South Dakota Department of Social Services website; then mail, fax, or take the application in person to a local Social Services office.  Have questions? Call (605) 773-3165.

Eligibility: Pregnant women with household incomes up to 133% of FPL; children with household incomes up to 204% of FPL (for CHIP); parents with dependent children are eligible with incomes up to 58% of FPL.

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