Fewer people than expected are signing up for Medicaid through an expansion backed by voters in 2022, and the state Department of Social Services is adjusting its budget to reflect the slower pace.

That’s at least partially because the state hasn’t publicized the expansion. Most enrollees sign up when they have a medical issue and need coverage to help pay for it, DSS Deputy Secretary and Director of Operations Brenda Tidball-Zeltinger told the budget-setting Joint Appropriations Committee this week.

Medicaid expansion opened the subsidized health care program to people whose incomes sit at 138% of the federal poverty level or less, which is up to $41,400 for a family of four or $15,060 a year for a single person. 

Enrollment for Medicaid expansion opened on July 1, 2023, after South Dakota voters approved the expansion in 2022.

The appropriations committee typically has one budget hearing for each state department during the regular legislative session. For DSS, the committee set aside a second meeting date explicitly to dive into Medicaid and Medicaid expansion. 

Initially, state officials projected that about 57,530 people would be eligible for expanded services, Tidball-Zeltinger told the committee. But those figures were pulled from 2015 data, and assumed that all eligible residents would sign up.

“Now, as we examine and have a few months of data in terms of how many people have enrolled in the program, we’re really revising that,” Tidball-Zeltinger said.

At the end of December, she said, the state had 17,520 people on the expansion enrollment list. 

Based on that slower uptake – enrollments have grown a little more than 26% each month for the last three months – Tidball-Zeltinger told lawmakers that about 40,000 people will have expanded coverage in 2025.

Those people are mostly adults without children, she told the committee. That group makes up 67% of the expansion population, the rest being parents. Sixty-five percent of enrollees also qualify for the Supplemental Nutrition Assistance Program, commonly referred to as food stamps.

Minimal outreach

Another figure offered during Monday’s meeting in Pierre caught the attention of lawmakers: 80%. That’s the number of newly enrolled Medicaid participants to have signed up with a medical claim.

“Oftentimes people come to us when they’ve got a health care issue, or they come to us through a provider as they’re seeing them,” Tidball-Zeltinger said.

Rep. Linda Duba, D-Sioux Falls, pressed the deputy secretary on why the agency hasn’t been more proactive in seeking out eligible adults.

“I can see billboards about vaccinations, and I can see billboards about STDs, but I have never seen any advertisements or any proactive community health workers that are out in communities as a result of DSS encouraging enrollment in those populations,” Duba said.

The department doesn’t intend to advertise, Tidball-Zeltinger said, but there are community organizations encouraging sign-up. The Community HealthCare Association of the Dakotas has worked to guide potential enrollees through the process. 

The department sees providers as partners in sign-ups, as they are often the ones who suggest that coverage might be available when someone shows up seeking care.

“We have done a lot of stakeholder webinars and communication work with our partners,” Tidball-Zeltinger said.

Duba pointed to North Carolina to suggest that South Dakota could do more. She said she’d recently visited and saw ads encouraging sign-up. 

Tidball-Zeltinger said that “some states took an approach very much like South Dakota,” which involved outreach to providers, while others used ad campaigns. 

“It’s really a mix,” she said.

She also pointed to a chart in the DSS presentation that compared rates of Medicaid expansion take-up in states surrounding South Dakota. Some states, like Iowa, had faster uptake for Medicaid initially. Others saw rates similar to South Dakota. But all of them saw steadily increasing numbers during the first two years of expansion.

Adding around 2,000 people a month, Tidball-Zeltinger said, is “in the ballpark with what we’ve seen in other states that surround us.”

Duba suggested, however, that the DSS work to track how much the state pays per enrollee and separately report the cost for those who sign up when seeking care versus those who sign up beforehand.

Duba argued that the second group of enrollees is likely to be less expensive to cover in the long run.

“If we were more proactive, people would be using preventative services, instead of coming in when they’re sicker, or they’re in greater need, which drives our utilization costs up,” Duba said.

Budget adjustments

Lower enrollments have also had an impact on the DSS budget, at least for 2024 and 2025. The federal government covers 90% of the cost for Medicaid expansion, and South Dakota also gets 5% more per year in federal dollars until 2026 to help the state ease into the expansion.

Lawmakers set aside about $54 million in state money for the first year of expansion. The department needed $37.5 million less than that. 

The department also revised its ask for 2025 downward by $16.4 million based on the lower enrollments.

South Dakota voters approved Medicaid expansion, but implementation may not be easy

Those budget revisions don’t signal savings, though. The department also set aside $11.4 million in “buy-down” dollars in 2024, and will ask to set aside another $18.3 million for 2025, in hopes of softening the budgetary blow when the 5% federal boost dries up in 2026. 

Jason Simmons, the budget director for the DSS, told appropriators that the $29.7 million set aside over those two years still won’t be enough come 2026.

“That’s still going to leave $34.5 million that the state is going to have to come up with (for 2026) just to maintain that baseline level of services,” Simmons said. “Any additional enrollment, any provider inflation, anything we see added to Medicaid is going to make that number go up.”

The DSS, Bureau of Finance and Management and the Legislative Research Council worked to adjust projections after enrollments began. The revised projections are a sign that a work group that met last year to discuss Medicaid expansion did its job, according to Rep. Tony Venhuizen, R-Sioux Falls.

“This is a big area in our state budget with a lot of unknowns right now and a lot of future growth, and it’s going to take up a lot of ongoing revenue into the future,” Venhuizen said. “And I think we’ve done a very good job of working together to project this to the extent that we can and to plan for building it into our budget.”