Will SDGOP Allow Hospitals to Fund Medicaid Expansion?

Senator Bernie Hunhoff (D-18/Yankton) insists “we’re making progress” toward expanding Medicaid under the Affordable Care Act. Is the key to bringing our ever-recalcitrant Governor Dennis Daugaard around getting South Dakota’s hospitals to pay for it?

That’s the funding route some other Republican-controlled ACA-objector states are pursuing, though with significant political difficulty:

…Arizona, which is controlled by Republicans, was among the first to tap hospitals in a 2013 deal to expand Medicaid. Since then, GOP-led Indiana has tapped the Indiana Hospital Association to partially fund its expansion along with cigarette tax revenue. Tennessee, which debated the issue shortly after Indiana announced its expansion in late January, went further. Hospitals there agreed to cover all of the potential costs the state would face. But the Tennessee state Senate rejected the plan, and the state House then decided against even giving the plan a vote in committee. Tennessee illustrates the political hurdles that remain despite promises of budget neutrality — a dynamic playing out in Utah and Kansas too [Chris Kardish, “GOP Charging Hospitals with Medicaid Expansion’s Future,” Governing, 2015.03.17].

According to this August 2014 analysis from the Urban Institute, South Dakota would need to spend $157 million over ten years to expand Medicaid as envision under the ACA. In return, the state would get $2.1 billion in federal funding. Spend a dollar, get $13.37 back. South Dakota hospitals would get $800 million for what would otherwise be uncompensated care.

The massive economic stimulus South Dakota would get from expanding Medicaid would benefit the entire state, including hospitals. It is not unreasonable to ask all beneficiaries to shoulder some of the cost… but don’t hospitals already bear sufficient cost in accepting the lower reimbursement for Medicaid patients?

Expanding Medicaid purely or partially with hospital dollars would be better than nothing. But the better than 13:1 return on investment shows South Dakota would still come out well ahead even if taxpayers footed the entire bill. What are we waiting for?

By the way, the Urban Institute report also calculates that South Dakota spends more in a single year on tax subsidies to attract businesses than it would over ten years to expand Medicaid. In other words, a thirteenth of our annual corporate welfare bill could cover Medicaid expansion, keep our neighbors healthier, lower hospital costs, and create 29,500 jobs. Medicaid expansion isn’t just corporate welfare; it’s everybody welfare!