PIERRE, South Dakota — An expansion of South Dakota's Medicaid program to provide health insurance to thousands of additional low-income people would reduce the number of people unable to pay their bills for medical care, hospital executives said Tuesday.
South Dakota hospitals were unable to collect about $90 million last year from people who had no insurance or otherwise did not pay their bills, according to the South Dakota Association of Healthcare Organizations.
Fred Slunecka, chief executive officer of the Avera Health System, said patients with private health insurance now pay extra to offset hospitals' losses in charity care and other unpaid bills. Businesses that provide insurance for their employees should support an expansion of Medicaid because providing coverage for an extra 48,000 low-income people would reduce the costs subsidized by private insurance, he said.
"They are the ones bearing the burden of bad debt and charity care," Slunecka told a state task force studying Medicaid expansion. "Right now it falls to the private business that provides insurance to their employees."
Gov. Dennis Daugaard appointed the 29-member task force of state lawmakers, doctors, health care executives and others to study the issue. The panel will not recommend whether Medicaid should be expanded in South Dakota, but instead will identify the advantages and disadvantages of doing so. Its report must be submitted by Sept. 15 to the governor and the Legislature, who will have the final say.
The Legislature this year agreed with the governor's recommendation to delay a decision on expanding Medicaid, the state-federal program that provides medical care to low-income people.
Daugaard has said he is uncertain whether the federal government will be able to meet its pledge of paying most of the costs of expanding Medicaid.
"That is probably Gov. Daugaard's most serious concern about expanding Medicaid. He is so frightened by the level of debt at the federal level," said Deb Bowman, a senior adviser to the governor and chair of the task force.
The federal health overhaul seeks to provide more low-income people with health insurance through subsidized private insurance offered through online marketplaces called exchanges. States also have the option of expanding Medicaid to cover people considered too poor to get the subsidized private insurance.
South Dakota's Medicaid program now covers about 116,000 children, adults and disabled people. The expanded eligibility would add an estimated 48,000 people, mostly adults without children.
People earning up to 138 percent of the federal poverty level would be covered by the expansion, which the federal government would full cover through 2016. The state's contribution would rise in stages to 10 percent of the medical costs by 2020.
South Dakota officials estimate that if Medicaid is expanded, the state would pay nearly $37 million in 2020 as its share of covering the extra 48,000 and administering the expanded program.
Task force members asked why hospitals want more people in Medicaid because the programs' payments for medical care are very low.
Dave Hewett, president of the South Dakota Association of Healthcare Organizations, said some payment is better than none. He said people without insurance now often delay getting medical care until they are seriously ill and then show up at emergency rooms or need other expensive care. An expanded Medicaid program would provide less expensive treatment earlier for those currently uninsured people, he said.
"They're trying to keep food on the table, lights on in the home and a roof over their heads," Hewett said.
Rep. Mark Mickelson, R-Sioux Falls, a member of the task force, said he is interested in helping people who face a financial catastrophe when they are hit with a huge medical bill.
"They have a $50,000 bill and it blows up their life," Mickelson said.
The task force also heard a report on arguments commonly given to support or oppose expanding Medicaid.
Arguments for expanding Medicaid include having the federal government pay most of the cost, improving the health of low-income people, boosting the economy with the extra medical spending and giving people something in return for the taxes they pay. Supporters also argue that Medicaid is a cost-effective way to provide medical care.
Arguments against the expansion include doubt that the federal government can afford it, the extra state spending for its 10 percent share, and a possible shortage of doctors and medical facilities to care for extra patients.