PIERRE, S.D. (AP) — The South Dakota Legislature's budget-writing committee rejected a plan to expand the Medicaid program Friday after a state official said Gov. Dennis Daugaard is setting up a group to study whether the state should cover thousands of additional low-income people in the program.
Sen. Stand Adelstein, R-Rapid City, proposed that about $1.5 million in state money be added to the state budget so South Dakota could get $58.3 million in federal funds to expand Medicaid and cover an estimated 48,000 additional people under the federal health care overhaul.
But the Joint Appropriations Committee voted 13-5 to reject Adelstein's plan.
Deb Bowman, a senior adviser to Daugaard, said the Republican governor will appoint legislators and others to a study committee that will make recommendations on the advantages and disadvantages of expanding Medicaid.
If the Legislature decided now to expand Medicaid, the additional people would not be covered until Jan. 1, when that part of the federal health care law takes effect, Bowman said. If the Legislature delays a decision for a year and then passes an expansion, the additional people would be covered by July l next year, she said.
Daugaard has recommended that South Dakota delay a decision on whether to expand Medicaid because he is uncertain the federal government can afford to meet its pledge of paying most of the cost. The governor also continues to ask federal officials for flexibility to limit the expansion to only part of the 48,000 who would otherwise qualify.
Adelstein said the Legislature should approve a Medicaid expansion now to provide health care to the working poor as soon as possible.
In addition, hospitals have said they are unable to collect about $90 million a year from low-income patients who have no insurance and are unable to pay their bills, Adelstein said. Hospitals then charge insured patients more to offset losses in charity care, he said.
South Dakota's Medicaid program now covers about 116,000 children, adults and disabled people. The expanded eligibility would add an estimated 48,000 people, mostly adults without children.
People earning up to 138 percent of the federal poverty level would be covered by the expansion, which the federal government would fully cover through 2016. The state's contribution would rise in stages to 10 percent of the medical costs, but the state would have to spend some extra money to manage the larger program.
Daugaard would like to expand Medicaid to cover only those adults earning up to 100 percent of the poverty level. That would add only about 24,000 to the program. The other 22,000 will be eligible to get subsidized insurance through the insurance exchanges set up in the federal health care law.
Bowman said those people who qualify for subsidized insurance would only have to pay 2 percent of their income to get that insurance.
Adelstein said the state could expand Medicaid coverage but withdraw that coverage if the federal government eventually breaks its promise to pay most of the cost.
But Rep. Mark Mickelson, R-Sioux Falls, said it's difficult to take away a benefit after people get used to it.
Mickelson said he doubts the federal government will be able to meet its commitment to pay nearly all the cost of the Medicaid expansion.
"I am hesitant to make a decision bases on someone's promise to pay when I don't think over the long haul they're going to be in any position to honor it," Mickelson said.
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