Concerns raised over unintentional coverage losses at final Medicaid work requirements hearing

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The Sioux Falls One Stop houses offices for several state departments, including Health, Social Services and Revenue. It hosted a hearing for proposed Medicaid expansion work requirements on June 12, 2025. (Makenzie Huber/South Dakota Searchlight)
More than a dozen people raised concerns and questions about unintentionally separating patients from their health care and other aspects of South Dakota's proposed Medicaid expansion work requirements during the plan's final public hearing Thursday in Sioux Falls.
Dana Bacon, state government affairs director at The Leukemia and Lymphoma Society, told the state Department of Social Services his organization has 'pretty big concerns' due to the technical problems, costs and unintended loss of coverage that people encountered during attempted work requirements in other states.
'That's going to make individuals, families, systems and communities pay a price for the outcomes,' Bacon said. 'We have a good sense of where this waiver is going, but we still see these problems getting in the way of the stated goal of making sure people get the health care they need.'
Written comments about South Dakota's Medicaid expansion work requirements proposal may be submitted by June 18 via email to [e-mail] with the subject line 'SDCareerLink Public Comment,' or mailed to the Division of Medical Services, Department of Social Services, 700 Governors Drive, Pierre, SD 57501-2291.
Other people questioned the need to implement work requirements and expressed concern about a potentially disproportionate impact on tribal members, as well as the potential barrier the plan could create to health care for sick, homeless and older people.
Medicaid is government-funded health insurance for people with low incomes. South Dakotans voted in 2022 to expand Medicaid to adults with incomes up to 138% of the poverty level, a decision that allowed the state to capitalize on a 90% federal funding match — funding that could be in jeopardy, pending the outcome of congressional action. Last year, voters passed another constitutional amendment to let the state seek approval from the federal government to impose work requirements on expansion enrollees.
The state began drafting its proposal immediately following the end of the state legislative session in March, before debates about potential federally imposed work requirements heated up at the congressional level. Those debates are ongoing.
The department only heard from one person at its first hearing in May. The state is also accepting written comments through Wednesday, which will be included in the state's application to the Centers for Medicare and Medicaid Services later this summer.
South Dakota's plan would require adult Medicaid recipients to work, train, attend school or serve as a caretaker for a child or elderly or disabled person in their home unless they qualify for an exception. Compliance with the state-level work rules would be reviewed on an annual basis, at the time of Medicaid renewal, rather than at the time of application. The state would not require a set number of hours of work or education time.
South Dakota would allow exceptions for people who are:
Pregnant or up to 12 months postpartum.
Disabled, as determined by the Social Security Administration.
Diagnosed with cancer or another serious or terminal medical condition by a physician.
In an intensive behavioral health treatment program, hospitalized or living in a nursing home.
In an area with unemployment 20% or more above the national average and are exempt from Supplemental Nutrition Assistance Program requirements for able-bodied adults without dependents.
As of last month, 30,542 South Dakotans were covered by the Medicaid expansion. The state estimates 80% of them already work or qualify for an exception. The proposed state-level work requirement would reduce enrollment by an estimated 5-10% in the first year. That would save the Medicaid program between $48.9 million and $71 million in the first year, the department says.
Federal action could make SD's Medicaid work requirements 'an exercise in futility,' official says
Department officials explained that expansion enrollees would be sent three notices before being removed from Medicaid rolls. People could reapply later if they don't meet work requirements at their renewal time.
Heather Petermann, Medicaid director at the department, said people who are seeking treatment for substance use disorder or other mental health disorders outside of intensive treatment programs could obtain an exemption if their physician or health care provider provided documentation that they can't work because of their condition.
Department Secretary Matt Althoff said the state's proposal is meant to be administratively simple and to encourage work among Medicaid recipients rather than track hours.
'We are helping them, we believe, not only by providing a safety net, but a lift up. Isn't it true that personal industry is the antidote to poverty?' Althoff said. 'The more that we can do to discover fulfillment through serving others, the more that we can do to garner an income that we earn, the higher likelihood we will be able to escape the clutches of poverty.'
Other suggestions made during public comment during the hearing included:
Adding volunteer or community service time as an exemption, to benefit older adults who can't find employment because of their age.
Exempting Indian Health Service beneficiaries, since they are eligible for Medicaid coverage at the federal level even if they do not meet other Medicaid requirements, such as income limits.
Allowing more flexibility to exempt caregivers of older adults who don't share the same residence.
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