PIERRE — Gov. Mike Rounds said Wednesday he is worried one proposal being discussed as part of national health care reform could lead to big budgetary trouble for South Dakota.

At issue is a proposed expansion of Medicaid eligibility from 100 percent of the federal poverty line to 133 percent, starting in 2013. The cost to South Dakota of covering the additional patients in Medicaid, Rounds said, would be $40 million per year or more.

“We have right now about a $1.1 to $1.2 billion budget. You’re talking about a significant impact,” Rounds told the Capital Journal. “We’re just trying to get out of the hole right now in terms of getting our revenues up so we can pay our own way without using additional federal assistance.”

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South Dakota’s projected 2010 Medicaid budget is $265 million.

“If you took our Medicaid budget from $265 million to $310 million, that’s a significant increase in our costs,” Rounds said. “Right now we’re projecting that sales tax collections in 2010 will be about $659 million. We would have to have an increase by about 5 percent of our total sales tax revenue just to pay for this one item.”

South Dakota’s sales tax revenue is projected to increase by $14.8 million — slightly more than 2 percent — from 2009 to 2010, Rounds said.

Medicaid is funded by both the states and the federal government. Rounds characterized Medicaid as an “unfunded mandate” because Congress can require states to spend more on Medicaid by expanding the program without providing federal funds to pay for the expansion — something Rounds and other governors are concerned about.

“We feel that if Congress is going to say, ‘We want to cover more people,’ it’s one thing to make that promise. It’s another thing to have a plan to pay for it,” Rounds said. “We continue to remind them that as governors, we have to balance our budgets. We want them to be responsible in terms of making a promise and finding the resources to pay for it. The two have to go hand in hand.”

Rounds also said he and other governors are concerned the cost to states for the Medicaid expansion could be even greater than the $40 million per year Rounds is worried about now. The expansion would cost states $60 million or more per year, a number which would then be reduced by federal reimbursements. But Rounds said he worries a federal government deep in debt might not follow through on its promised aid.

“If they’re not able to come up with additional revenue, they may very well say, ‘We’d like to give you additional money but you’re stuck paying the bill,’” Rounds said. “Most states, South Dakota included, we’re having a real tough time just trying to pay our own bills right now.”

Despite his criticism of the unfunded Medicaid expansion, Rounds said he did not want to be misconstrued as opposing health care reform — though he did voice skepticism, shared by many conservatives, about the government offering a public health insurance option.

“There’s a discussion about the fact that we’re concerned about this unfunded mandate. Then it puts us in the light that we’re opposing a health care reform package. That’s not true,” Rounds said. “There are a lot of things we could do nationally to reform health care that the states have done individually.”

Rounds said he has sent letters to South Dakota’s Congressional delegation expressing this concern, which he said other governors around the country have also taken up.

“We know that this is a work in progress in Washington,” Rounds said. “We continue to try to share with Congress that they’re making promises they can’t keep. That’s our concern. We want to work with them to get true reform done.”