South Dakota’s Medicaid Rubicon – WSJ

In some states where Republican lawmakers didn’t cave, liberals circumvented the legislatures with ballot measures. Voters in Idaho, Maine, Missouri, Nebraska, Oklahoma and Utah have voted to expand Medicaid. Now liberals want to make South Dakota—one of only 12 remaining holdouts—the seventh.

Amendment D would expand Medicaid to about 45,000 lower-income working-age adults whether or not they work or could obtain coverage through an employer. Supporters, including several large healthcare systems, labor unions and the state medical association have misled voters about the costs and benefits.

Myth one: The expansion will help the needy. The state Medicaid program already covers low-income children, the elderly, pregnant women, the disabled, and parents with household income up to 63% of the poverty line. Many of the newly covered could earn enough by working part-time to get generous subsidies for ObamaCare plans.

Myth two: Amendment D will save the state $60 million. Democrats’ Covid bill last March sweetened the incentive to expand Medicaid by increasing the federal match for traditional beneficiaries by 5% for two years. This would save South Dakota an estimated $110 million during the first two years of the expansion and offset its $50 million cost for new enrollees.

But these putative savings will vanish after two years. Then the state will still have to pay 10% of the cost for new enrollees or about $30 million a year. While South Dakota had a $115 million surplus this year, an economic downturn would reduce revenue while swelling Medicaid rolls. The expansion could force cuts to other programs or lead to tax increases. This is one reason Governor

Kristi Noem

opposes it. South Dakota has no income tax, but the Medicaid expansion could increase political pressure to impose one.

Liberals say expansion states aren’t struggling to pay their bills, but that’s because they’ve received an airdrop of federal pandemic relief, which includes more Medicaid dollars as long as there’s a public health emergency. Wait until a recession stresses state budgets.

Myth three: Federal dollars from the expansion will boost the state economy. South Dakota’s 2.3% jobless rate is the lowest on record, and employment has increased 4% from pre-pandemic levels. Employers are desperate to hire, and the expansion could reduce the incentive for able-bodied adults to work.

Several states with strong economies haven’t expanded Medicaid, including Texas, Florida, South Carolina, Tennessee and Georgia. South Dakotans would be wise to avoid the Medicaid expansion trap.