Expanding Medicaid a question of better health, worries about costs

2012-12-09T06:30:00Z Expanding Medicaid a question of better health, worries about costsKevin Woster Journal staff Rapid City Journal
December 09, 2012 6:30 am  • 

State Rep. Bernie Hunhoff sees it as the biggest issue of the 2013 South Dakota Legislature, a chance to provide health insurance to tens of thousands of uninsured South Dakotans and save hundreds of lives over time.

Gov. Dennis Daugaard sees it as an opportunity tied to a question that stretches far into the future and might carry a burdensome price tag — one, perhaps, that could be too big for South Dakota to pay.

The option of expanding Medicaid coverage in South Dakota to cover more than 48,000 new recipients is an issue that could live tall in the 38-day legislative session that begins in early January. And it already has put Daugaard in a spotlight of national criticism for his opposition — for now, at least — to that expansion.

Daugaard inspired the ire of online critics Tuesday during his budget message to state lawmakers when he talked about who the 48,000 new Medicaid recipients would be.

"I want to stress that these are able-bodied adults. They're not disabled. We already cover the disabled," he said. "They're not children. We already cover children. They're adults, all of them."

That led some critics to label the governor as hard-hearted, a characterization that Hunhoff rejects.

"He's a very caring and conscientious person," said Hunhoff, a magazine publisher from Yankton who leads the Democratic caucus in the South Dakota House. "I don't think it's black and white with him. I think he's interested in the issue. I hope and think the discussion is still open with him."

It's an easy call for Hunhoff, a second-term House member who served three terms in the state Senate in the 1990s and was his party's nominee for governor in 1998. This is one of those issues that can define an era and help shape the future, he said.

"There are times when I wonder why I bother to go to the South Dakota Legislature, and then an issue comes along and you feel like you really need to stand up and make the argument, make the fight," Hunhoff said. "This is one of those issues. It has such potential to do great good."

The problem is money, but not right away. The federal government will cover the cost of the Medicaid expansion included in the Patient Protection and Affordable Care Act — often referred to as Obamacare — for the first three years.

During that period South Dakota could get up to $200 million a year to cover the expansion costs, depending on how many of the 48,000 eligible people sign up. The state would pay an estimate $1 million to $2 million a year in administrative costs.

After that, however, the financial questions begin, with the federal government backing off from 100 percent coverage to a 90 percent level in 2020. At that point, if all of the 48,564 people estimated by the state to be eligible sign up, the cost to the state for the 10 percent could be $40 million to $45 million, Daugaard senior adviser Deb Bowman said.

And it isn't clear what would happen after that, she said.

South Dakota is already losing ground in the federal match on existing Medicaid patients. The state's share, which is now about 43 percent, is set to go up to 45.8 percent in the next fiscal year. The percentage is expected to hit 50 percent two years beyond that.

And each point increase costs the state $7 million.

The increases in the state's share are coming because it shows better growth in per-capita income than most states, a good-news/bad-news reality that is likely to continue, Bowman said.

Mix in questions about where the state's share for expanded Medicaid coverage will end up and it poses unknowns with potentially devastating financial consequences, she said.

"Nobody has any idea what the rate will be in the future," Bowman said. "I think that's the big question mark."

The Medicaid expansion was initially a mandatory part of the Affordable Care Act. But a U.S. Supreme Court ruling gave the states the option of participating or not.

Daugaard prefers not to, for now, arguing that there are too many questions about the eventual cost to the state and the people — the able-bodied adults — who would be served by the expansion.

The two Republican members of South Dakota's congressional delegation understand and support Daugaard's position, which other Republican governors have taken.

"I can understand why governors aren't rushing into this," U.S. Rep. Kristi Noem said. "As a former state legislator, I am well aware of how the federal government's promises to states don't always pan out."

Each governor and legislature should make the decision based on what's best for their state, she said.

Sen. John Thune agreed, noting "the federal government's track record of not fulfilling promises and the serious debt and deficit issues Washington faces." In addition, President Obama has already indicated a desire to find a "blended rate" for state Medicaid percentages somewhere between what they now pay and the 90 percent, Thune said.

"While this proposal would save the federal government money, it is backtracking on that (90 percent) promise and would leave states that had already made a commitment to expand the number of enrollees to foot the bill," Thune said.

Democratic Sen. Tim Johnson sides with Hunhoff, however, saying the state should take advantage of the opportunity to expand Medicaid coverage for the poor with strong financial support from the federal government.

There will be a cost-saving impact over time, Johnson said.

"This will also reduce costs and improve health outcomes because more folks will get regular care, not just when care is very costly," he said. "Medicaid expansion will also provide savings in the state and local governments by reducing uncompensated care."

The local taxpayers often end up paying the tab for uninsured people who put off routine care and end up with serious, expensive treatment, Rapid City physician Dr. Kevin Weiland said.

"If they end up in the emergency room that cost is phenomenal," he said. "They're not going to pay the bill but the emergency room cannot deny care to those patients by law. So the county pays. And that's the taxpayers."

Currently, Medicaid provides care for low-income children and pregnant women, as well as the elderly, disabled and very poor. And very poor means a family of three making about $10,000 a year.

The move to expand that into the working poor with higher incomes — the able-bodied adults the governor referred to — is the point of debate. Bowman said an example of the people who would be eligible in the expansion are people working two part-time jobs who don't get work-related health coverage.

"I don't think anybody would imply that they're not good people or are not trying hard," Bowman said.

But that doesn't change the question of economic unknowns, she said.

Bowman said Daugaard is "very caring, very compassionate" but also very concerned about making a decision today that future governors, legislators and citizens might come to regret. The governor noted that the state has the option of expanding Medicaid in coming years, giving officials time to better understand the impacts and possibly find more flexibility.

With most of the state damaged by drought, prudence is responsible, he said during a public speech in Rapid City on Wednesday.

"Until we emerge from the drought, I think it would be prudent to be cautious," Daugaard said.

Hunhoff appreciates that but also notes that the damaging vagaries of weather never really leave.

"It's always something. If it's not a drought, it's flood or a blizzard, or something," he said. "If this expansion is a good idea in a year or two or three, it's a good idea today. And people need it now."

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com

Copyright 2015 Rapid City Journal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

(8) Comments

  1. bluestem
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    bluestem - December 11, 2012 6:59 am
    Good point, tipimakr.
  2. bluestem
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    bluestem - December 11, 2012 6:58 am
    Daugaard's "able-bodied adult" rationale is swiss-cheese logic. Able-bodied adults get sick, able-bodied adults have accidents, and able-bodied adults need health care, too. Now, suppose they're not able-bodied, they apply for SSD, right? If among the fortunate one-third who are awarded right away (meaning within 120 days), they get to wait 30 months to be eligible for Medicare.
  3. Just Another Taxpayer
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    Just Another Taxpayer - December 10, 2012 12:11 pm

    You know how Medicaid works right? The government reimburses the doctor at a set rate. Sometimes that rate doesn't even cover the costs of the procedure. So what does the doctor do? He charges more money to the patients with private insurance. Something that should be illegal.

    Second, GL and tipimakr tell me how the ACA is going to reduce healthCARE costs? Take your time on your answer. Re-read the law. It doesn't do anything to reduce healthCARE costs. I beat this drum all the time, but you guys never listen. If the doctor charges $100 now for procedure and then $200 tomorrow who is going to pay? The answer is you. Either in higher out of pocket expenses, higher insurance costs, or higher taxes. For us still in private insurance the ACA did all three without helping us one bit.
  4. GL
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    GL - December 10, 2012 10:30 am
    'stupid or naive' would be you if you think the emergency room is the answer.
  5. Rowdy
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    Rowdy - December 09, 2012 3:19 pm
    Anyone who thinks giving people "free" healthcare will reduce costs and improve care is either stupid or naive - probably both. South Dakota's Medicaid budget is already gobbling up money for other areas, like education and road repairs. With few doctors accepting Medicaid patients, most of those same people will continue to receive care for acute illnesses in the emergency department anyway. They just won't be as likely to go for every little ailment like most Medicaid patients do now.
  6. Dog Soldier
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    Dog Soldier - December 09, 2012 12:16 pm
    The deadline for states to opt in or out is this month, but I believe the Affordable Care Act also has the option for governors to change their mind later on when they find out that the program works. This will allow DD to take credit for something he chose not to participate in at present.
  7. GL
    Report Abuse
    GL - December 09, 2012 10:41 am
    Daugaard "very concerned about making a decision today that future governors, legislators and citizens might come to regret."
    Why don't you consider it "might" save many lives and reduce costs?
    In 2013 the Medicare program will launch a pilot program to bundle payments for doctors, providing incentives to deliver higher quality health care while lowering costs. This just "might" work Governor. And in the meantime, people with Medicaid and Medicare will continue to see improvements in access to and quality of care.
    Think about Dakotans before the Republican Party, "Governor".
  8. tipimakr
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    tipimakr - December 09, 2012 8:56 am
    I encourage the Republican Party in South Dakota and also in other states to NOT set up a state run medical exchange...let the Feds do that! That way after the states realize what they've done, it will be too late! By then we will have a Federally run and managed Health Care System based on the Veterans Administration Health Care System...which I might say here, is the best health care system in the world!
    Thank You Governor Daugaard for your shortsightedness and for your skepticism...thanks to your inability for long range planning, we will finally get what we want without putting up even a small struggle!
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