- Associated Press - Monday, February 24, 2014

PIERRE, S.D. (AP) - The South Dakota House rejected a plan Monday that would have used state money to buy insurance for the working poor as an alternative to a Medicaid expansion that would be financed largely with federal funding.

The measure failed on a vote of 24-45 after opponents said it would cost the state far more while providing health coverage to far fewer people than an expansion of Medicaid would.

Lawmakers said the bill also might have hampered the state’s request for federal approval to let South Dakota expand its Medicaid program in a way that would provide medical services only to those most in need.

But the bill’s main sponsor, Rep. Scott Munsterman, R-Brookings, said his plan would help low-income people get health insurance without using federal money.

“It seeks to solve our health care access problem with our money under our control,” Munsterman said.

Munsterman’s plan would have used $14 million in state money to buy private insurance for people earning less than the federal poverty level while working at least 40 hours a week. He said it would have covered nearly 4,000 people earning less than 100 percent of the poverty level, about $11,700 for a single person or $23,850 for a family of four.

However, lawmakers said they want to see whether federal officials will approve the state’s request for a partial Medicaid expansion.

The federal health care overhaul gives states the option of expanding Medicaid to cover people earning up to 138 percent of the federal poverty level. Gov. Dennis Daugaard has asked for federal approval to expand eligibility only up to 100 percent of the poverty level because those above that mark can buy subsidized insurance through the new health care law.

South Dakota’s Medicaid program now covers about 116,000 children, adults and disabled people. The full expanded eligibility to 138 percent of the poverty level would add an estimated 48,000 people, mostly adults without children.

An expansion to 100 percent of poverty level would add about 26,000 to Medicaid.

The federal government would fully cover those added to Medicaid rolls through 2016. The state’s contribution would rise in stages to 10 percent of the costs by 2020, or about $20 million if eligibility were expanded to 100 percent of the poverty level or $38 million if expanded to 138 percent of the poverty level.

Members of the Democratic minority sought to change Munsterman’s bill to fully expand Medicaid, but that move failed on a mostly party-line vote of 19-50.

“Why not do it now? The benefits are enormous,” House Democratic Leader Bernie Hunhoff of Yankton said as he urged expansion of Medicaid.

Other lawmakers asked Munsterman how he would come up with $14 million to buy private insurance for low-income people.

He suggested that the state might tap a reserve fund that holds more than $20 million because fewer people than expected have signed up for the existing Medicaid program.

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