Commentary

South Dakota's Republican legislators pursue a back-door way to dump Medicaid

By Dana Hess

South Dakota Searchlight

Posted 2/4/25

South Dakota’s Republican-dominated Legislature has never been a fan of expanded Medicaid. Now a proposed constitutional amendment making its way through the Capitol offers a back-door way for …

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Commentary

South Dakota's Republican legislators pursue a back-door way to dump Medicaid

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South Dakota’s Republican-dominated Legislature has never been a fan of expanded Medicaid. Now a proposed constitutional amendment making its way through the Capitol offers a back-door way for them to shut it down. That piece of legislation, House Joint Resolution 5001, has some momentum. It passed out of the House State Affairs Committee on an 11-2 vote and was endorsed by the full House on a vote of 59-7.

Medicaid is a federal-state partnership designed to provide health insurance for low-income people. In 2022, South Dakota voters endorsed a constitutional amendment that allowed the state to join the federal government’s expanded Medicaid program. Expanded Medicaid offers coverage to adults whose incomes are up to 138% of the poverty level.

Republicans in the Legislature have never been happy with the voters’ decision to join expanded Medicaid. In 2024, they backed a constitutional amendment — ultimately approved by voters — seeking a work requirement for able-bodied adults on expanded Medicaid if the federal government were to allow it. With Donald Trump back in the White House, that may become a reality.

According to a South Dakota Searchlight story, total Medicaid enrollment in the state as of November was 148,303 with 28,726 on expanded Medicaid. The state’s Medicaid budget is about $2 billion with the federal government paying about $1.4 billion.

Expanded Medicaid was created in 2014 as part of the Affordable Care Act or Obamacare. As an incentive for states to join, the federal government pays 90% of the cost. That’s the problem, according to Rep. Tony Venhuizen, a Sioux Falls Republican. Venhuizen is sponsoring HJR 5001, a constitutional amendment that would allow South Dakota to drop out of expanded Medicaid if the federal government’s participation drops below its 90% payment.

“All along there has been an assumption that the 90-10 share is not going to go anywhere, but I no longer think that’s a safe assumption,” Venhuizen told the House State Affairs Committee. “We all know that since the election, there has been a lot of talk about getting federal spending under control.”

The new presidential administration seems to have a well-developed fetish for cutting costs. However, it is hard to follow the logic that says a billionaire should be tasked with the job of telling the rest of us what government services we can do without.

Venhuizen has a point when he says that cutting the federal share of expanded Medicaid would be an easy way for the government to save some money.

It was tough to nail down how much it would cost South Dakota at the committee hearing. Venhuizen testified that a 10% cut in the federal share would cost the state $20 million. A proponent of the legislation from the state Bureau of Finance and Management said that every cut of 1% in the fed’s share would cost the state $4 million. Multiply either one of those figures by the 41 states that have expanded Medicaid and it adds up to the federal government being able to save some serious money.

Venhuizen is right on a couple of other counts. It’s dangerous to have a federal program enshrined in the state constitution. If something goes wrong, it would take an amendment to fix it and el1ections only roll around every two years. And he’s right when he says that it could get too expensive for the state budget if the federal government decides to change how much it pays for expanded Medicaid.

He borders on disingenuous, however, when he maintains that while passage of the constitutional amendment would take expanded Medicaid out of the constitution, it wouldn’t necessarily kill the program.

He told the committee that the Legislature could allow it to continue.

This is the same Legislature that stubbornly refused to consider the expanded health insurance program for low income South Dakotans. Throughout opponent testimony about the resolution, it was mentioned that the Legislature had many chances to enact expanded Medicaid but never did.

It took a vote of the people to expand Medicaid in South Dakota. They had to take action because the Legislature wouldn’t. At the very least those voters, and the people enrolled in expanded Medicaid, deserve some straight talk about what will happen if Venhuizen’s amendment becomes part of the constitution.