When President Obama met with the nation’s governors in February 2011, S.C. Gov. Nikki Haley asked him to allow states to opt out of key provisions of the Affordable Care Act.

Based on the U.S. Supreme Court’s ruling Thursday, South Carolina no longer has to ask for permission on one provision. State leaders can simply refuse to take part in the law’s expansion of Medicaid benefits in 2014.

The director of the state Health and Human Services agency said Friday his department would favor opting out if it comes down to that.

“I can say pretty directly that as it’s described now in the Affordable Care Act, the administration is not interested at all in pursuing that expansion,” said Tony Keck, who was selected by Haley to lead the Cabinet agency.

Plenty could change before 2014. Republicans in Congress have pledged to repeal or dismantle the Affordable Care Act, and they could have a better chance if fall elections lead to a power shift in Washington.

But if the expansion of Medicaid rolls is still planned in 2014, South Carolina leaders will have a choice. They can accept or reject federal dollars — 100 percent in the first two years, no less than 90 percent after that — to cover an additional 500,000 mostly working poor in the state under Medicaid. Despite the federal government paying most of the cost, Keck thinks the expansion is a bad deal for the state.

“We’d be pouring all sorts of money into a system that’s flawed,” Keck said. “Those advocating expansion don’t ask the next question about that 10 percent: Is it better spent somewhere else?”

The preliminary estimate on the cost for the state to cover its portion of the expansion is $1.1 billion annually. Keck believes the state would be better off spending that money on targeted health efforts rather than broad efforts. Even spending it on early childhood education or jobs growth can be more effective health tools than some Medicaid efforts, he said.

“Health is 90 percent having good income, good education and making good choices,” Keck said.

While Keck’s department, a Cabinet agency, handles Medicaid in the state, he recognizes the Legislature will play a lead role in the opt-out debate. With a decision 18 months before the scheduled start of the expansion, the Supreme Court ruling “put this properly into state legislative bodies to debate,” Keck said.

In addition to Haley’s already clear opinion on the opt-out option, her administration can make the point by presenting HHS budgets that don’t include the Medicaid expansion funds.

“We’re not going to shove more South Carolinians into a broken system that further ties our hands when we know the best way to find South Carolina solutions for South Carolina health problems is through the flexibility that block grants provide,” said Haley spokesman Rob Godfrey.

The Supreme Court ruled the provision of the Affordable Care Act expanding Medicaid eligibility is constitutional only if states are allowed to opt out. And they can opt out of only the expansion while maintaining their existing Medicaid funding.

In South Carolina, Medicaid covers about 800,000 people. The expansion would add about 500,000 people in 2014, mostly adults with income less than about $15,000 or adults in a family of four with combined income less than about $31,000.

Such a blanket expansion isn’t efficient, Keck said.

“Take a guy who is young and healthy and has a job, we’re going to give him health insurance,” Keck said. “We have pockets in this state where there are profound health problems. We need to focus on hot spots and health disparities.”

As an example of a focused local program that works, Keck pointed to the state’s effort to cut down on elective births before the 39th week of pregnancy. Encouraging physicians, hospitals and pregnant mothers to wait leads to healthier babies, which reduces health care expenses. A study of Medicaid payouts in the state found early births cost an average of $15,539, while full-term deliveries cost $9,978.

Every S.C. hospital that delivers babies agreed last year to make efforts to cut down on early elective births. HHS is pushing for changes in payouts that would increase incentives to delay births until the 39th week.

Keck acknowledges the Affordable Care Act has some positives. It requires better coordination of care for people eligible for both Medicaid and Medicare, which not only improves the health of those patients but cuts down on expensive duplication.

“Incredibly, there’s a group of Republicans and Democrats raising hell about it,” Keck said. “The one thing that’s working, and they’re wanting to screw with it. That’s why you’ve got to keep the federal government out of health care.”