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How Federal Dollars Are Helping South Dakota

By Dee Mahan,


One of the top priorities of the right-wing group Americans for Prosperity (AFP) is stopping Medicaid expansion across the country. And in South Dakota, they’ve stepped up their operations, working to derail expansion discussions in that state.

In state after state—including South Dakota—they’ve been relying on misleading claims, saying states can’t afford to accept federal dollars to provide health coverage to hard working low-income residents. Their arguments against federal funds fail to acknowledge how states operate, what federal funds mean for states, and what Medicaid expansion would actually mean for states and their residents.

The facts about South Dakota and federal dollars

Accepting federal money doesn’t create a burden on South Dakota taxpayers. Rather, this money helps keep South Dakota’s economy strong and growing.

The state already benefits tremendously from federal funds. Of all the general revenue the state generates, 4 out of every 10 dollars comes from the federal government.

According to the Tax Foundation, a nonpartisan research organization, South Dakota is among the states receiving a high percentage of federal support. In fiscal year 2015, that federal money included:

  • $380.7 million for transportation and highways
  • $192 million for K-12 education
  • $172.2 million for the Board of Regents for public universities and higher education
  • $102 million for the support center in Redfield for South Dakotans with intellectual and developmental disabilities

What impact is accepting all this federal funding having on the state? These federal dollars strengthen, rather than weaken, the state’s economy. At 3 percent as of December 2015, the state’s unemployment rate continues to be one of the lowest in the nation. That gives South Dakota the second-lowest unemployment rate in the country (the national unemployment rate was 5 percent in December 2015). The state also continues to have one of the lowest tax rates nationwide.

Medicaid expansion: Influx of federal funds and quality health coverage for uninsured South Dakotans

Medicaid expansion is one more way the state can capitalize on the availability of federal funds while helping working but uninsured South Dakotans. Accepting federal funds to expand coverage through Medicaid would mean health coverage for 30,000 state residents who don’t currently have an option for affordable health insurance.  And most of those gaining coverage are working. Health coverage would help these working adults stay healthy and be more productive, while the influx of federal funds would boost the state’s economy.

In fact, states that have expanded Medicaid are seeing budget savings and revenue gains. They are also reporting reductions in hospital spending on uncompensated care, stronger hospitals, and job growth. This suggests that Medicaid expansion is one of the best things lawmakers can do for state budgets.

Accepting federal funds benefits states across the country

If you look closer, in every state where AFP and other opponents of Medicaid expansion trot out the argument that the state shouldn’t take federal funds, you’ll find a state that, like South Dakota, is already benefiting greatly from federal funds for other programs—and probably one that fights hard for more federal funding.

Groups opposing Medicaid expansion would have us believe that accepting federal funds to provide health care to hard-working state residents is somehow less worthy than accepting other federal dollars.

That’s just not so.  South Dakota can step up, develop a South Dakota solution to expanding Medicaid, and accept federal funds with a huge payoff:  a healthier, more productive population.