- Associated Press - Saturday, June 6, 2015

SIOUX FALL, S.D. (AP) - Gov. Dennis Daugaard says it’s up to federal officials to come up with a potential solution for thousands of South Dakota residents whose insurance premiums could jump thousands of dollars a year if the U.S. Supreme Court strikes down a key provision of the Affordable Care Act.

Daugaard, a Republican, said recently that he doesn’t envision a state fix to help preserve financial assistance if the high court decides to scrap insurance premium subsidies for consumers in the more than 30 states, including South Dakota, who sign up for coverage under the federal marketplace. The lawsuit that’s prompting the decision expected this month argues the way the law is written means subsidies should be limited to people who live in states that created their own health insurance marketplaces.

“We certainly don’t have the wherewithal in our budget to restore subsidies, so that’s just not even a practical reality,” Daugaard told The Associated Press. “What will happen, I expect, is unless the federal government produces some solution to replacing the subsidies, it will revert back to pre-Obamacare conditions where people buy insurance at the marketplace rates without a subsidy if they can.”

Bob Laszewski, president of Health Policy and Strategy Associates in Virginia, said he hasn’t seen a federal plan to maintain subsidies that would make it through the Republican-held Congress and get President Barack Obama’s signature. He said South Dakota officials could set up a state-based exchange to ensure that consumers keep their subsidies if the court rules against them.

Without financial assistance, it’s expected that most of those consumers would drop coverage.

Daugaard’s administration has so far declined to establish a state exchange and appears unwilling to do so to escape the potential premium hikes. Daugaard spokeswoman Kelsey Pritchard said in an email that setting up a state exchange “is a very costly and time-consuming process that other states have struggled to implement successfully.”

Leaders from both parties in South Dakota’s Republican-dominated Legislature said they haven’t had discussions about how the state might handle a decision from the court removing the subsidies. Laszewski said he hasn’t seen states adequately planning for that possibility.

“People have to fix this, and the state can fix it and the Congress can fix it,” he said. “It’s very difficult, but it’s possible. So, it seems to me that elected officials, whether they’re in Pierre, South Dakota, or they’re in Washington, D.C., have got a responsibility to do everything they can for these people.”

Senate Minority Leader Billie Sutton, D-Burke, said he supports a state exchange and hopes South Dakota establishes one if the subsidies are struck down. He said Republicans and Democrats in the state should have been more active in planning for that outcome, though he said some details are still unclear.

The removal of the subsidies could affect more than 88 percent of the roughly 19,000 South Dakota residents who bought coverage through the exchange during the 2015 enrollment period. Roughly 16,800 of those consumers got an average federal subsidy of $229 each month, according to recently released data.

Lisa Carlson, Director of Planning and Regulation for Sanford Health Plan, which offers coverage in South Dakota through the federal marketplace, said a ruling against the tax credits would devastate consumers. Sanford has about 2,200 members covered through the exchange, with more than 1,800 getting subsidies.

Avera and Dakotacare also sell plans in South Dakota through the federal marketplace. Avera spokeswoman Lindsey Meyers said in an email the company would work with the state; she didn’t have enrollment data. A representative for Dakotacare didn’t respond to a request for comment.

Carlson said Sanford hasn’t had conversations with the state or other insurance companies about the effects of the potential Supreme Court ruling. But she said the state often brings together carriers after similar decisions are made to have a “brainstorming session.”

It’s also unclear what the effective end-date of the subsidies would be if the court decides to toss them out, which is a significant unknown, she said.

CJ Clifford, a member of the Oglala Sioux Tribal Council, said he has coverage through the exchange that has helped him get his shoulder replaced. Clifford, whose subsidy is at risk, said he signed up for coverage to help free up money for other tribe members to get care from the Indian Health Service.

“As far as creating a better quality of life for me, it has done that already,” he said.

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