Last week, Gov. Daugaard said “states like South Dakota could not plausibly” set up their own insurance exchange to preserve subsidies for low-income Americans if the Obama administration loses in court. Such a ruling would cause the subsidies of approximately 6.4 million people in at least 34 states using the federal insurance exchange HealthCare.gov to lose the premium tax credits that enable them to afford health plans.
South Dakota is one of the 34 states that have not raised its own insurance exchange, putting it at risk of losing federal subsidies for its qualifying low-income residents. Gov. Daugaard, along with several other Republican governors, has said a federal contingency plan could help offset some of the disruption that would inevitably occur following a ruling in favor of King.
“This is a federal problem that requires a federal solution,” Gov. Daugaard said, according to the report.
Last week, Pennsylvania and Delaware said they would launch their own exchanges to preserve the insurance subsidies for residents, and both states want to use existing elements of the federal health insurance exchange, such as its website and call center.
Gov. Daugaard has not shown the same willingness to create a state-run health exchange in South Dakota, according to the report.
“If only it were so easy,” he wrote. “Creating a state-run exchange is not so simple as passing a law, signing a paper or flipping a switch. It is an expensive and time-consuming process.”
Gov. Daugaard also brought up a 2011 study that caused the state to opt out of launching its own exchange. The study found it would cost South Dakota $45 million to establish its own exchange and between $6 and $8 million per year to maintain it.
President Barack Obama’s administration has repeatedly stated there is no “easy fix” if the healthcare subsidies are eliminated, but it has promised to collaborate with Congress and the states to find a solution, according to the report.
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