2018 MIDTERM ELECTION

Time: D H M S

Will South Dakota be the next GOP-held state to finally accept Medicaid expansion?

With South Dakota's DAKOTACARE dropping off the ACA exchange and asking for 63% rate hikes, this (potential) development can't come soon enough:

South Dakota may join 30 other states in expanding its Medicaid program if federal officials approve a plan Gov. Dennis Daugaard is set to outline to the nation’s top health and human services administrator in Washington on Tuesday.

The Republican governor is meeting with Health and Human Services Secretary Sylvia Burwell to explain the plan, and the federal government has so far been more open to discussions than in the past, said Tony Venhuizen, chief of staff to Daugaard. The proposal, which is in its early stages, would make about 48,500 South Dakota residents newly eligible for the program.

The twist this time is that the Indian Health Service, which provides healthcare coverage for around 2 million Native Americans nationally, would be involved:

Officials are focusing on people who are eligible for Medicaid but can get services through the Indian Health Service. The goal is make services through the Indian Health Service more accessible so that people don’t have to go an outside health care provider, which can happen if the IHS is unable to offer a specific service.

Those services at the IHS are fully funded by the federal government through Medicaid rather than through the typical split in financing between the state and the federal government. Venhuizen stressed that the money would come from Medicaid, and wouldn’t drain the IHS budget.

The reason I mentioned the DAKOTACARE factor is this: As I noted back in July, there's nearly 2 million ACA exchange enrollees (well, more like 1.8 million now due to attrition) with incomes between 100-138% of the Federal Poverty Line. Due to an odd overlapping quirk in how Medicaid expansion works, people over 100% of the FPL are eligible for federal tax subsidies to buy private insurance via the ACA exchanges...but the cut-off for Medicaid eligibility (in states which have expanded the program) is effectively 138% FPL.

That means that if every state expanded Medicaid, those 1.8 million people would actually be moved off of their heavily-subsidized private insurance and over to Medicaid proper. Ironically, this would result in exchange enrollment dropping by 18% relative to the 10 million who were enrolled as of June 30.

In South Dakota specifically, expanding Medicaid should mean that roughly 6,800 of the 19,000 residents enrolled via the exchange--a whopping 36% of the total--would likely be shifted off of their private policies over to Medicaid itself. The article linked to above estimates the total number eligible in SD at around 48,500; as far as I can tell, the remaining 41,700 are childless adults below 100% FPL and parents between 58% - 100% FPL.

(As an aside, it's insane to me that the cut-off for a parent is 58% FPL in the first place. The federal poverty line for a single parent of 1 child is $15,930. 58% of that is $9,240 per year, so a single parent earning $770 per month wouldn't be eligible for Medicaid, which is insane, though I presume they qualify for welfare and/or other related programs).

Of course, only around 23% of those on the individual market in South Dakota are enrolled through DAKOTACARE, and I don't know what proportion of those 6,800 in the 100-138% range are among them, but assuming an even spread among the insurance carriers, expanding Medicaid should provide an easy solution to around 1,600 of them.