A new report released this week outlines the potential for significant funding disparities between states that expanded Medicaid (expansion states) when compared to states that have not expanded Medicaid (non-expansion states). The report focuses on the 19 states that opted out of the Affordable Care Act’s (ACA’s) full expansion for Medicaid, including South Dakota, in reviewing the current version of the American Health Care Act (AHCA) and identifies that these states will receive $680 billion less than expansion states over 10 years. South Dakota’s portion of that total is an estimated loss of $8.814 billion!
“The report identifies the potential for locking in massive funding disparities between expansion and non-expansion states,” said Scott A. Duke, president/CEO of the South Dakota Association of Healthcare Organizations (SDAHO). “While the AHCA does attempt to provide a measure of relief to non-expansion states like South Dakota, the amount is woefully insufficient and must be addressed by the U.S. Senate during their deliberations.”
The report released by the Missouri Hospital Association (download report) takes into account the various structural Medicaid funding provisions contained in the House version of the AHCA over the next decade — such as the move to per capita spending caps — and other provisions meant to lessen the disparity for non-expansion states. The latter includes eliminating Medicaid Disproportionate Share Hospital (DSH) payment cuts two years earlier for non-expansion states than for expansion states, as well as establishing a $10 billion safety-net fund.
As outlined in the report, when considering these provisions expansion states will see an average of $1,936 per beneficiary compared to $1,158 per Medicaid beneficiary in non-expansion states over the next 10 years. The disparity is a result of using 2016 as a base year when establishing the AHCA’s per capita cap rates, which locks in the significantly enhanced federal Medicaid matching funds for expansion states. This means enhanced funding continues forward at those higher rates while non-expansion states will not recover from their disadvantaged financial position.
The South Dakota legislature has not supported the expansion of Medicaid. The Missouri report shows that Medicaid funding disparities, as included in the House version of the AHCA, will likely result in South Dakota being placed at a significant disadvantage long-term. Ironically, non-expansion states are essentially being penalized for rejecting ObamaCare in a bill that is repealing ObamaCare. Our concerns are based on the lack of parity and unfair treatment non-expansion states would receive.
We continue to urge Sen. John Thune and Sen. Mike Rounds to fight for South Dakotans and ensure Medicaid funding equity under any proposals acted upon by the Senate.