South Dakota governor expects some state savings, as federal share of Medicaid goes up

Capitol News Bureau

PIERRE, S.D. (KELO) — State government agencies that help pay for Medicaid and related health services to lower-income adults and children in South Dakota face an unusual situation.

The federal government will be paying an even larger percentage of Medicaid costs for South Dakota, but a smaller share of the Children’s Health Insurance Program.

“This year is atypical because the CHIP match rate previously included a temporary increase, as part of the Affordable Care Act, that ends in September 2021,” said Marilyn Kinsman, a senior policy analyst at the state Department of Social Services.

The Medicaid change reflects South Dakota’s weaker economy compared to other states.

On the other hand, the federal government is phasing out a CHIP bonus South Dakota has been receiving, so state government’s share for the CHIP services gets larger.

Adding to the complexity is the fiscal years don’t match. The federal budget runs October through September, while South Dakota is July through June.

For budgeting purposes, South Dakota uses a blended rate, taking the last quarter of year one and the first three quarters of year two.

The state Department of Social Services pays for CHIP coverage and most Medicaid services in South Dakota. The state Department of Human Services also provides Medicaid coverage.

The Legislature’s Joint Committee of Appropriations heard budget overviews from the departments’ leadership teams the past week showing Governor Kristi Noem’s recommendations for the coming year.

Human Services officials expect their department’s general fund spending for Medicaid to go down $2.7 million in the budget year that starts July 1, while federal spending would rise $2.8 million.

Social Services officials, because of CHIP, expect an overall combined increase for Medicaid and CHIP of $294,193 from general funds and a corresponding federal reduction.

Here’s a three-year look at South Dakota’s match rates:

2019 (through June 30, 2019) — Medicaid: State 43.63 percent; federal 56.37 percent. CHIP: State 7.54 percent; federal 92.46 percent.

2020 (started July 1, 2019) — Medicaid: State 42.61%; federal 57.39%. CHIP: State 15.45 percent; federal 84.55 percent.

2021 (starting July 1, 2020) — Medicaid: State 41.88 percent; federal 58.12 percent. CHIP): State 26.44 percent; federal 73.56 percent.

For participation numbers, see the governor’s recommended 2021 budget. Social Services Medicaid and CHIP data are on page 153. Human Services Medicaid data are on pages 270 and 274.

Copyright 2021 Nexstar Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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