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South Dakota Focus | What can North Dakota teach us about Medicaid expansion?

From South Dakota Focus: What happens next for Medicaid expansion? Originally aired Jan 26, 2023

Chris Jones has learned quite a lot about how Medicaid works in the past few years. He’s North Dakota’s Commissioner of Health and Human Services. Jones was appointed to the position three years after the North Dakota legislature adopted Medicaid expansion. During the initial transition, Jones was working in the private sector.

“So, as a corporate health care executive, I thought that I could make a huge difference in how Medicaid operated,” says Jones. “Thought it was really inefficient, really wasn’t meeting the needs, and I thought I understood about 40% of it. But at the end of the day, I only really understood about eight percent of it.”

North Dakota and South Dakota share many similarities—population size and density, geography, and agricultural base for their economy—but their approaches to Medicaid expansion are very different. For example, North Dakota expanded through legislative action, rather than South Dakota’s voter-approved constitutional amendment.

“Medicaid expansion was passed and went live in 2014,” says Jones. “I work with some of the best legislators, and they said, ‘Chris, the only way Medicaid expansion was going to pass is if it was administered by a private entity in a Managed Care Arrangement.”

That’s a major difference between North Dakota’s Medicaid expansion and how South Dakota will handle things. North Dakota contracts with a third-party to administer Medicaid benefits to those now eligible for coverage. Jones says this option is more predictable from a state budget standpoint. The state pays a set monthly premium for each enrollee whether they receive treatment or not. Handling the coverage with a third party also means the state does not have to bring on more workers, which can be attractive to more conservative lawmakers. However, it tends to be more costly to the state overall. In most cases, South Dakota pays providers directly only when a Medicaid recipient receives care. Governor Kristi Noem’s proposed budget calls for nearly 70 new positions in the Department of Social Services to manage the additional workload.

Commissioner Jones says federal funding played a part in that decision North Dakota’s decision to use a third-party administrator. Medicaid expansion was 100% federally funded when North Dakota adopted the program. Now, the federal government covers 90% of the costs.

“If individuals are looking at North Dakota and trying to compare it to South Dakota, it’s not possible. We are the highest-cost state in the country.”
Chris Jones, Commissioner of the North Dakota Department of Health and Human Services

“Because we did managed care and it was quote unquote ‘free money,’ we paid at commercial rates,” says Jones. “So in other words, we have been paying at about 175% of Medicare this whole time.” By comparison, South Dakota’s fee schedule for hospitals is about 80% of Medicare. Jones thinks South Dakota will not experience nearly the same cost for Medicaid expansion as North Dakota.

“If individuals are looking at North Dakota and trying to compare it to South Dakota, it’s not possible,” he says. “We are the highest-cost state in the country.”

Commissioner Jones of North Dakota says he had a conversation with leaders from South Dakota’s Department of Social Services, but it’s not clear exactly which other states the department has consulted as it plans for expanded Medicaid coverage. A spokesperson for the department said in an email: “South Dakota consulted with states that have expanded recently as well as states geographically similar to South Dakota.”

However, that question also came up during a recent presentation for the Joint Appropriations Committee as the Department of Social Services explained the potential budget impact of the additional enrollees.

“We had really great conversations with a number of other states that have expanded recently,” said Sarah Aker, the state’s Medicaid director. “Specifically, Oklahoma met and exceeded their estimates.”

Oklahoma also expanded Medicaid through a voter-approved constitutional amendment. That was during the summer of 2020, and the program launched about a year later. The federally-declared public health emergency for COVID-19 meant people could stay on the program even if they exceeded initial income requirements. That in turn resulted in higher costs to states. The federal public health emergency has been extended every 90 days since early 2020, but if it ends before July, it may not be an issue for South Dakota.

Thanks to adequate funding, Oklahoma had a relatively smooth transition into expanded Medicaid coverage. The Oklahoma Healthcare Authority held outreach events and launched a social media campaign to raise awareness of the program. The state had already approved applications for about half of its estimated new enrollees a month before the program launched. It’s not yet clear if South Dakota will take similar proactive measures.

In North Dakota, Commissioner of Health and Human Services Chris Jones says the benefits of Medicaid expansion are clear. He says expanding Medicaid eligibility has had a positive impact on behavioral health issues, and the program has had a minor impact on the number of uninsured people in the state.

“I would also tell policymakers to really give your Department of Human and Social Services a ton of grace and the resources necessary to do it,” says Jones, “because it is a very big lift to push this forward.”

Jackie is based out of SDPB's Sioux Falls Studio.
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