Two election outcomes in November will determine future of Medicaid work requirements

An attempt by Republican lawmakers to add work requirements for South Dakotans covered under Medicaid expansion will hinge on two election outcomes in November.

First, voters will decide on Amendment F, a legislative effort to allow employment criteria to be used for able-bodied adults to receive Medicaid benefits as part of the 2022 expansion approved by South Dakota voters.

Medicaid is a joint federal and state program that helps cover medical costs for qualified individuals with limited income and resources.

Even if voters approve the change to the state constitution, it will take a victory by Republican Donald Trump in the presidential election to move the plan forward. That’s because changes to Medicaid eligibility need to be cleared through the federal government.

When Trump was in office from 2017-2021, his administration approved work requirement plans for 13 states. Most required working-age recipients who don’t have children or other dependents to be employed at least 80 hours a month to stay covered, with exemptions such as full-time schooling or community service.

When Democrat Joe Biden took office in 2021, the federal Centers for Medicare & Medicaid Services blocked such requests and rescinded state plans approved under Trump, many of which were tied up in the court system at the time.

State Rep. Tony Venhuizen, a Sioux Falls Republican who helped spearhead Amendment F, told News Watch that Democrats keeping the White House would almost certainly delay implementation of Medicaid work requirements in South Dakota for at least four years.

“Biden has disallowed them. I assume (Democratic nominee) Kamala Harris would do the same,” said Venhuizen. “There has really not been enough time to fully implement these plans in any state.”

Contrast in political philosophies

Work requirements are already part of the federally funded Supplemental Nutrition Assistance Program (SNAP), commonly known as food stamps.

Adding the criteria to able-bodied Medicaid health care recipients highlights a fundamental difference between conservative and liberal political philosophies, not just in South Dakota but across the country.

Conservatives view work requirements as a means of putting certain individuals on a path to greater self-sufficiency and less reliance on government programs. Liberals see the requirements as an impediment to eligible citizens getting the medical assistance they need.

Unlike Medicare, which provides health care for the elderly, Medicaid focuses on low-income individuals and covers services such as hospital visits, preventative care, X-rays and family planning.

The Affordable Care Act in 2010 expanded Medicaid to include nearly all adults with incomes up to 138% of the federal poverty level, which translates to an annual gross salary of about $21,000 for an individual or $43,000 for a family of four.

But the U.S. Supreme Court ruled in 2012 that states could reject the expansion and still get federal funding for traditional Medicaid costs.

South Dakota was one of the Republican-led states that resisted expansion, which meant childless adults without a disability were ineligible for Medicaid coverage regardless of income level. Many also didn’t qualify for ACA subsidies to help obtain private coverage unless their income was at least 100 percent of the poverty level.

The number of these residents who “fell through the cracks” of health care coverage in South Dakota was estimated at 42,500 for five-year planning by the Legislative Research Council. Nearly 30 percent of the uninsured in South Dakota in 2022 were Native American, according to U.S. Census data, compared to about 8 percent of the population that is Native American.

South Dakota became one of 40 states to expand Medicaid when voters approved the 2022 constitutional amendment with 56% of the vote.

Matter of 'dignity and humanity'

The wording of the amendment passed in 2022 said that the state “may not impose burdens or restrictions that are greater than those imposed on any other person eligible for Medicaid benefits under South Dakota law.”

“That sounds reasonable enough,” said Venhuizen, a former chief of staff under Gov. Kristi Noem and former Gov. Dennis Daugaard. “But keep in mind that traditional Medicaid covers the elderly, children, the disabled and pregnant women, all subject to income guidelines, and you would never apply a work requirement to those groups. It wouldn't make any sense. So (Amendment F) doesn’t enact a work requirement. It just removes a prohibition. Right now, our constitution says that we can’t even consider this, and I think that’s wrong.”

State Rep. Kadyn Wittman, a Sioux Falls Democrat who has pushed for more support for low-income and homeless populations, sees the amendment as an attempt to water down what South Dakota voters passed two years ago.

“I voted for Medicaid expansion before I was a state legislator, so I’m deeply offended by the insinuation that I did not understand what I was voting for,” Wittman, who is running for re-election in District 15, told News Watch.

She added that work requirements add unnecessary administrative burdens and have not proven to boost employment numbers in states where they’ve been enacted.

South Dakota currently has the nation’s lowest unemployment rate at 2%.

“I think there's an inherent conflict between promoting personal responsibility and also making sure that we have equitable access to essential services and support,” Wittman said. “When jobs that are available don’t offer sufficient hours or wages to meet basic needs and we’re restricting access to Medicaid, that’s a huge problem. If you look at rural isolation and economic hardships in smaller communities, I feel like our role in government should be to uphold the dignity and humanity of people we serve. And work requirements show a lack of compassion and support.”

Study: Work program failed in Arkansas

A Harvard University study published in 2020 found that Medicaid work requirements in Arkansas, the first state to implement such a plan in 2018, caused thousands of low-income adults to lose coverage without increasing employment numbers.

“By April 2019, when a federal judge put the policy on hold, 18,000 adults had already lost coverage,” said the report in the New England Journal of Medicine. “Most of those coverage losses were reversed in 2019 after the court order.”

Administrative complexities and lack of awareness about reporting requirements explained some of the falloff, said the study. Researchers found that of those who lost coverage, “50% reported serious problems paying off medical debt, 56% delayed care because of cost, and 64% delayed taking medications because of cost.”

A federal district judge discontinued the program after state residents sued, and an appeals court unanimously upheld the decision in 2020.

The U.S. Supreme Court agreed to hear an appeal but later ruled the case moot after Biden took office and his administration reversed Trump-era approvals for work requirement plans.

Venhuizen, running unopposed for re-election in District 13, pointed out that the Arkansas program was in effect less than a year before being cut short.

“It didn’t have very long to get off the ground before it was ended, so I don’t know that the experience was all that informative,” he said. “What I would say is that South Dakota has a reputation for doing an excellent job administering programs like this, and we already have a work requirement for SNAP, so I think concerns about the administration of this are pretty overblown.”

Medicaid enrollment trails projections

Concerns about the cost and administrative stress of Medicaid expansion in South Dakota, which took effect in July 2023, have so far been unfounded.

As of June, the total number of Medicaid expansion enrollees was 24,241, well short of the projected 35,000 at the one-year mark by state legislators and the South Dakota Department of Social Services.

Social Services Secretary Matt Althoff told Appropriations Committee members in May that enrollment numbers are hard to predict and swayed by economic trends. Venhuizen, who serves on the committee, added that “these are working-age adults, so most only show up at the hospital when they’re sick or injured, and that’s when they sign up (for Medicaid).”

Federal dollars absorb a large percentage of the cost. When the 2022 amendment was drafted, the Legislative Research Council estimated the total cost of expansion over the first five years at $1.5 billion, of which the state’s share would be $166.2 million.

Total savings to the state's general fund – from federal matching and incentive funds and fewer reimbursement payments to hospitals for treating uninsured patients – was estimated at $162.4 million over that five-year period, putting the state’s net financial obligation at $3.8 million.

“It will cost us less to expand Medicaid than it cost to buy the governor a new airplane,” Democratic state Sen. Reynold Nesiba told News Watch at the time, referring to the state’s 2021 purchase of a $4.5 million Beechcraft King Air 350. “The failure of South Dakota to take this step is one of the most short-sighted economic decisions we have ever made.”

Nesiba, who is not running for re-election, has derided Medicaid work requirements as government bureaucracy designed to "deny health care to people who otherwise qualify for it."

Asked whether he considers work requirements a fiscal priority, Venhuizen stressed that Amendment F does not add employment criteria to Medicaid but rather puts South Dakota in position to legally do so at some point in the future.

That will likely require a Republican in the White House and enough political gumption from the state’s dominant party in Pierre to make it happen.

“If you got to a point where you had a governor and a Legislature who wanted to do this, and who felt that the juice was worth the squeeze, and the federal administration was willing to entertain it, that's when you would talk about what it would look like,” Venhuizen said.

“What exceptions are there? How will we administer this? What would be the projected savings? My motivation isn't really fiscal because I don't think doing this would save a great deal of money. It's more about just being consistent in our philosophy in South Dakota that any social program is about giving someone a hand up, not a long-term way of life.”

The Associated Press contributed to this report, which was produced by South Dakota News Watch, an independent, nonprofit news organization. Read more in-depth stories at sdnewswatch.org and sign up for an email every few days to get stories as soon as they're published. Contact investigative reporter Stu Whitney at stu.whitney@sdnewswatch.org

This article originally appeared on Sioux Falls Argus Leader: Two election outcomes in November will determine future of Medicaid work requirements