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Daugaard: Cutting Health Insurance Subsidies Bad, So Obama Should Compromise

Governor Dennis DaugaardGovernor Dennis Daugaard’s hand-wringing over the possible interruption of the federal health insurance premium subsidies by the Supreme Court isn’t quite as clueless as John Thune’s majority-leader-disqualifying tweet on the topic. Daugaard’s letter to that Sioux Falls paper on the topic is nonetheless a doozy demanding debunking:

Federal health insurance subsidies are a cornerstone of the Affordable Care Act. The Act dramatically increases the market-based cost of health insurance, by requiring insurance companies to insure consumers without regard to preexisting conditions or other risks. These cost increases are offset by the federal subsidies [Gov. Dennis Daugaard, “Court Ruling on ‘Obamacare’ Subsidies Could Be Disastrous for S.D.,” that Sioux Falls paper, 2015.06.1o].

The ACA has caused no dramatic increase in the cost of health insurance. Premium increases have been about the same in ACA marketplace plans and private plans. ACA Silver plan premiums rose 2% nationwide from 2014 to 2015. Health care costs overall are growing more slowly now than they did prior to the ACA and the recession.

I am very concerned about the impact such a court ruling would have on South Dakotans. It would be the latest disruption caused by the rocky implementation of this flawed law [Daugaard, 2015.06.10].

Uff da—now I know why Pat Powers isn’t writing as many blog posts; he’s apparently writing politically charged nonsense for the Governor. An adverse ruling from the Supreme Court in King v. Burwell would not be “the latest disruption caused by the rocky implementation” of the ACA. This disruption, on the off chance the Supreme Court goes for it, would be caused by conservative monkeywrenchers more interested in destroying by litigation what they could not beat in three elections than in fixing one sentence in the ACA.

Some have asked why South Dakota can’t simply switch to a state-run insurance exchange in this scenario, as the federal law clearly allows for subsidies to continue in states with state-run exchanges.

If only it were so easy. 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. It requires the participation of the insurance industry, the addition of new bureaucracies and regulatory schemes, and the costly creation of a sophisticated, web-based exchange portal [Daugaard, 2015.06.10].

Some have asked…? I asked! Come on, Dennis—can you not give me the hat tip?

Now what happened to South Dakota can-do self-reliance? This Governor saw a potential flood coming for North Sioux City and turned an I-29 exit into an instant levee. Are you telling me that we couldn’t find some health IT experts from DSU, hire a few call center operators, and whip up a state exchange that could function better than what the feds built?

After ACA passed, my administration undertook a detailed analysis of the pros and cons of a state exchange. This was not driven by politics; it was based on practical considerations of implementation. That analysis is available at

That report estimated that it would cost $45 million to implement a state exchange for South Dakota, and that its ongoing operation would cost between $6 million and $8 million annually. We concluded that, for a small state like South Dakota, we simply did not have enough insurance consumers to bear the cost of creating and maintaining our own exchange [Daugaard, 2015.06.10].

$45 million? Hmmm… through December 2014, the federal government gave states over $4.8 billion to help set up state exchanges. South Dakota took $6.9 million in planning and establishment grants just to assure ourselves that letting Uncle Sam do the work for us was a better plan. The 14 states and DC that went through with state exchanges each got an average of over $170 million in federal Level II Establishment grants.

But that was then, this is now:

If the Supreme Court rules against federal subsidies on federal exchanges, states like South Dakota could not plausibly set up state exchanges in the time that would be required and to attempt to do so would impose significant costs on our insurance consumers [Daugaard, 2015.06.10].

I’ll grant the Governor that statement. Building a state insurance exchange from scratch, right now, in three weeks, after missing our chance to build a state exchange with generous federal help, as a hedge against the uncertain outcome of a Supreme Court case, is not wise or practical.

So what do we do? If you’re Dennis Daugaard, you shift the blame and politick:

This is a federal problem that requires a federal solution. The root of this issue is that Congress rushed to pass this massive legislation without carefully reading it or considering its impacts. I hope President Obama will seek compromise with the Republican Congress to solve this problem, perhaps along with other common sense reforms. Our nation should not allow health insurance consumers to suffer for the sake of political purity [Daugaard, 2015.06.10].

(I’m sorry—this is the portion of the debate where I throw my pen at the speaker from my judge’s desk)

Dennis! As a Governor who has denied South Dakotans better health, 29,500 new jobs, 1.38 billion dollars in economic activity, and enough new stimulated tax revenue to pay for a state exchange just because those benefits would have “OBAMA” stamped on top, you should not presume to lecture Obama, me, or fleas on political purity.

The President doesn’t have to seek compromise to solve this problem. It takes one sentence—In Section 1401, strike “established by the State” and after “1311” insert “or 1321”—to avert what you call a disaster. Your “perhaps along with other common sense reforms” lacks a hyphen and is code for holding a simple fix hostage for the ideological purpose of trashing the gains made by the Affordable Care Act.

If a flood were coming and South Dakota didn’t have sandbags, Governor Daugaard would call Washington and say, “Send us some sandbags!” If John, Kristi, or Mike said, “Golly, Dennis, we could do that, but how about we attach that request to some proposals that will really get the President’s goat?” our Governor would interrupt and say, “NO! Sandbags! NOW!!!” Whether the flood came or not, we’d have sandbags, and we could still fight our political battles on other bills.

By one count, the odds are 60–40 that the Supreme Court upholds the premium tax subsidy in South Dakota and 33 other states. for over six million people in South Dakota and other states using the federal exchange. Governor Daugaard could have have guaranteed those subsidies by taking advantage of federal help to build a state exchange. His colleagues in our Congressional delegation could make those odds 100–0 with one simple statutory change. But their political purity has left over six million people playing pocketbook chicken with the Supreme Court.


  1. SDBlue 2015-06-11 12:50

    The Republicans who represent our state (Noem, Thune, Rounds, Daugaard), have no interest in embracing the ACA. It is much easier for them to blame President Obama than to actually take an active role in providing healthcare for South Dakota citizens. They keep repeating the same old song and dance. It isn’t even original anymore.

  2. Donald Pay 2015-06-11 13:04

    You voted for this guy? Creating a state-based marketplace is not that difficult. All you need to do is paste and copy what the feds have already done for this year, then just make some minimal efforts the next year. But Daugaard isn’t even willing to try to save his constituents a little money. Oh, if you were Citibank, he’d go right to work for you. But you ain’t Citibank, are you?

    Think of it this way, Daugaard: pretend your constituents matter as much as the deep borehole disposal site for radioactive waste you are spending lots of state money and resources to land. How many FTEs are working on that project? Maybe you could shift some over to do something good for the people instead.

  3. Rorschach 2015-06-11 13:17

    Speaking of radioactive waste, Popular Science has an article about scientists reviving old technology that was passed over decades ago but may be the next big thing. According to the article, molten salt reactors are virtually accident proof, can run on the spent fuel rods left over from existing reactors, burn up to 96% of their fuel as opposed to the 4% used by existing light-water reactors, and generate 75 times the electricity per ton of uranium that existing light-water reactors generate. So instead of burying nuclear waste, we can take that waste and use technology to generate more energy with it. Sounds more promising to me than Janklow’s Edgement folly of importing garbage to leaching gold from it. And the problems with finding suitable disposal sites (or mining more uranium) may just go away.

  4. Kurt Evans 2015-06-11 14:10

    Cory wrote:
    >“Dennis! … you should not presume to lecture Obama, me, or fleas on political purity… Your ‘perhaps along with other common sense reforms’ lacks a hyphen …”

    When used as an adjective, “commonsense” isn’t hyphenated. It’s one word. :)

  5. bearcreekbat 2015-06-11 16:37

    Daugaard’s political game playing has already hurt thousands of our friends and neighbors by repeatedly rejecting the Medicaid expansion. Why in the world would he care about South Dakotans who have benefited from the ObamaCare ACA subsidies? They should just “go eat cake.” But like the not so brilliant John Thune, Daugaard seems to think South Dakotans are stupid enough to buy into falsely blaming the President. After all, they voted for Daugaard and a one-party legislature even though this was against SD voters’ financial and moral interests.

  6. Roger Cornelius 2015-06-11 18:13

    South Dakota republican are being short sighted.

    Doing they realize the millions and millions of dollars in Obamacare funds that could be corrupted? They certainly know that there is profit in corruption.

  7. Roger Elgersma 2015-06-11 18:32

    “this was not driven by politics, it was driven by practical considerations of implementation.” is a blantant lie. The republicans have had nothing but schemes of tearing it apart piece by piece. Trying to make it work is opposite of what they tell their base. This is just another angle at discrediting it after they have tried to stay out. They have been against rates going up so that those with preexisting conditions can have coverage while they are admitting that people that had preexisting conditions was a flaw on the old system that should be improved. Double talk forwards and backwards is the disaster here.

  8. grudznick 2015-06-11 20:41

    Even that young Ms. Wismer who had almost 20% of the vote wanted to blame Obama. There is maybe 2.38% according to studies but even the leaders of the Democrat party are trying to distance themselves.

  9. jerry 2015-06-11 21:21

    Dennis Daugaard is our Baghdad Bob who chortles on like Tehran John with lie after lie. Why should he not spread the manure? The local yokels in the media do not dare question the big fake. They spoon up his drivel like a hog with fermenting corn, hence the saying “worthless as teats on a boar”. Our media lives up to the slogan with pride. Daugaard could actually do something on his own regarding healthcare here, but he is to busy counting his money to give a care about the working poor and those in need.

  10. BOHICA 2015-06-11 23:07

    Good article. It appears that other successful State model websites…who have already invested the resources… could be used in SD if we had the will. The money is/was available to clone one of them and offset some of their costs. I am also confident that the major hospital systems in SD would fund some, if not all of any state financial obligation for expanding Medicaid…after all, they currently receive $0 for those services provided to these folks…any reimbursement for uncompensated care would be appreciated by them and shared back to the State. Bonehead economics should be a required course in high school, college, and technical schools…for youth of all political affiliations…it obviously hasn’t been.

  11. caheidelberger Post author | 2015-06-11 23:14

    (Kurt, either way, the adjectives requires connecting those words. Plus, the flow of the sentence allowed one intrusion, not two. :-D )

  12. Don Coyote 2015-06-12 09:09

    Even if the ACA prevails in King v Burwell, 50% of the meager 13 state exchanges (Hawaii, Oregon, Massachusetts, Maryland, Vermont, New Mexico, and Nevada) that were set up have performed so poorly that they have or will be closing up shop and letting the Feds run the program. It’s abundantly clear that the ACA state exchanges are an abject (and expensive) failure.

  13. leslie 2015-06-13 00:25

    see for up-to-date “abundantly clear” reporting of the status of the 51 (23 state/27 fed) exchanges. Nationwide, 31 million underinsured people are reasonably satisfied with their coverage and costs and are getting their care today (instead of delaying or missing needed medical care), care like coyote likely is getting.

    what is your opinion of the 48,000 without coverage in SD and 30-90 dead this year because of GOP resistance to expanding Medicaid, coyote??

  14. leslie 2015-06-13 00:32

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