We understand that times are tough and that cuts to state programs seem unavoidable. With state aid to education and Medicaid as our state’s two largest spending programs, it is also understandable that these programs are the first on the chopping block. Medicaid spending grew at an average rate of 8.8 percent in fiscal year 2010 across all states. This was the highest rate of growth in eight years. The nationwide recession and job losses resulted in more people on the Medicaid rolls, leading to higher spending.

While we understand why a Medicaid payment cut might seem reasonable, rate cuts will result in more health care providers restricting their Medicaid participation. This will worsen the challenge that patients face in finding a provider and receiving necessary services. Medicaid reimbursement for health care services right now is less than the cost of providing those services. Nobody wants to turn patients away. But if the reimbursement becomes even less, providers who see large numbers of Medicaid patients will be faced with very hard choices if they want to stay in business.

 With a cut in Medicaid rates, many health care providers will likely cut back on or actually stop seeing Medicaid patients. Fewer providers will be able to afford to see Medicaid patients, making it even more difficult for many of South Dakota’s most vulnerable citizens to see a health care provider when they need one. As more providers leave Medicaid, the cuts will contribute to higher Medicaid costs because more patients will have no choice but to rely on costly hospital emergency rooms (ERs) for care. We know that already fewer than 20 percent of emergency room visits involve a true medical emergency. The average cost of an emergency visit in 2003 was $560, while a visit to a primary care physician was less than half this cost.

We know there are alternatives that can help prevent the effect of these cuts to access to care, including:

* Expanding care options for people with chronic illnesses through enhanced medical homes that provide a central place for all care, from primary care visits and screening to more acute care services; and

* Supporting the expansion of primary care physicians and services by increasing training and strengthening loan forgiveness programs.

We respectfully request that Governor Daugaard and the legislative leadership sit down with our state's health care organizations and try to work out a solution that will be best for all South Dakotans.