Governor 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 http://federalhealthreform.sd.gov/documents/exchange_planning_effort_report.pdf.
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.