PIERRE – Gov. Dennis Daugaard proposed a sweeping expansion of Medicaid during his budget address Tuesday. However, his plans for increasing teacher pay won’t be unveiled until his State of the State address on Jan. 12, 2016.

Hesitant in the past to expand the health care program for the poor, Daugaard said changes in federal attitudes about reimbursement policies made this the right time to expand the program. An expanded Medicaid program in South Dakota would serve an additional

 55,000 adults.

“I have been unwilling to support the expansion of Medicaid in the past, primarily because of the cost to the state,” Daugaard said.

The expansion hinges on changes in the way the Indian Health Service is reimbursed. Currently when Native Americans who are Medicaid eligible get health care from IHS, the agency has 100 percent of the cost reimbursed by the federal government.

 Other providers who treat Medicaid-eligible Native Americans are reimbursed by the federal and state government. Daugaard said South Dakota spent $67 million last year from the general fund to pay its share of the $139 million it cost to care for Native Americans

 who sought treatment at clinics other than IHS facilities.

Daugaard said Native American patients may not be able to use IHS services because of distance, the lack of a medical specialist at IHS or the need for an emergency procedure.

Daugaard said recent negotiations between the state, Indian tribes, IHS and the federal Department of Health and Human Services have shown a willingness to change the way IHS is reimbursed, fully funding care of Native Americans.

Daugaard explained that the negotiations hinge on South Dakota expanding Medicaid.

“Health and Human Services will not approve a change in how IHS reimburses our state unless we use the proceeds to fund expansion,” Daugaard said.

By FY21, the federal government will expect states to pick up 10 percent of all Medicaid costs. Daugaard estimates the state’s share that year could be $57 million. The state could realize as much as $67 million in savings next year if the IHS reimbursement

 rules are changed.

“This solution is aimed at solving the future need,” Daugaard said.

The governor admitted that with so many entities involved in the negotiations, which will ultimately have to be approved by the Legislature, that the change is far from a certainty.

“This is not a done deal,” Daugaard said. “There are many moving parts.”

The governor’s proposed $4.8 billion budget for FY17 is likely to get larger when he unveils his plan for implementing the findings of the Blue Ribbon Task-Force on Teachers and Students. While he put off presenting his plan until the State of the State address

 at the beginning of the next legislative session, Daugaard offered some hints as to what his plan will include.

“I agree that South Dakota needs to increase teacher salaries to remain regionally competitive and to avoid a teacher shortage,” Daugaard said. “Progress in this area will require new state funds. The public expects us to be bold and make real progress this

 year.”