Medicaid costing state more for expansion enrollees

PIERRE, S.D. (KELO) — The average Medicaid payment in South Dakota has so far been thousands of dollars more for an adult enrolled in the expanded income-eligibility portion of the program than for the total number of residents enrolled overall.

That’s according to data that the state director of medical services presented Tuesday to the South Dakota Social Services Board .

Heather Petermann told board members that the average cost per Medicaid enrollee overall rose from $5,901 in fiscal 2023 to $6,915 in fiscal 2024, while those adults in the expanded-eligibility population cost an average of $10,745 in 2024.

The state fiscal year runs from July 1 through June 30. The state government and the federal government jointly pay for Medicaid services.

Petermann said having more people enrolled overall in Medicaid was one reason that the average cost was lower. Monthly enrollments in 2023 averaged 145,350 adults and children, while in 2024 they averaged 127,644, she said.

Medicaid enrollment fell as the COVID-19 health care event subsided and fewer people were eligible for the government-paid healthcare services. Petermann said that general enrollment in Medicaid went from 126,884 in 2023 down to 95,115 in 2024, and that enrollment through the Children’s Health Insurance Program (CHIP) also dropped, from 18,466 to 15,853.

But South Dakota voters decided two years ago to expand Medicaid eligibility from 100% of the federal poverty level to 138%, allowing more working-age adults to become eligible, and that added a monthly average of 16,696 adults in fiscal 2024, according to Petermann. The latest numbers show that through September there were 27,316 adults enrolled under the expanded eligibility .

The number of claims processed by the state Department of Social Services fell somewhat during the same period, from 7.3 million in 2023 to 7.1 million in 2024, she said.

“They continue to grow,” Petermann said about the number of adults who have enrolled under the expanded eligibility piece. “They are less that what was projected overall as possible.” She said South Dakota’s experience has so far generally matched what other states went through when their Medicaid eligibility expanded.

Two years ago, a consultant to the department estimated that 52,000 South Dakota adults would enroll for Medicaid services in 2024 if voters approved the eligibility expansion, with that number growing to 56,600 over the next four years. So far the number of expansion enrollees has been less than half of the estimate.

Social Services Secretary Matt Althoff told the state board on Tuesday that the trend points to South Dakota eventually having that many adults enrolled. “We just don’t know when,” he said.

Petermann, who became South Dakota’s Medicaid director in January after more than 11 years with the Minnesota Department of Human Services, said that the funding provided by South Dakota lawmakers reflected an attitude of preparing for the worst while hoping the numbers didn’t come true. “That’s always the trick of a health insurance plan,” she said.

This fall, South Dakota voters will decide whether to allow state government to seek a work requirement for those adults who enroll under the expansion piece and aren’t mentally or physically disabled. Althoff had testified in favor of putting the measure on the ballot, and Republican lawmakers did.

One of the board members, Howard Grinager of Sioux Falls, who had been a Democratic candidate for the Legislature in the past, asked Althoff about the measure on Tuesday. Grinager questioned whether a work requirement would make the program more expensive to administer because more paperwork would be required.

Althoff didn’t directly address the question. He said there’s “an opportunity cost” if people don’t work and said that the benefit from getting people into jobs would “easily pay” for any additional costs.

“This is a political football, I realize that,” Althoff acknowledged. He said people in the department were often already aware of situations, such as a spouse with cancer. “We’re really more focused on the person and helping them the best we can,” he said.

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