PIERRE, S.D. -- South Dakota Gov. Dennis Daugaard said Thursday he is dismayed by the U.S. Supreme Court's ruling that upholds the federal health care law, but said he'll work to protect the state from what he sees as the law's harmful effects.

"Now that the lawsuit is behind us, it is our duty to study all the available options and make an informed decision that minimizes the damage this law could do to South Dakota's health care and insurance industries," Daugaard said in a written statement.

Daugaard has opposed President Barack Obama's health care mandate, arguing that decisions on health insurance and Medicaid coverage for low-income people should be left to the states.

The Republican governor, with the hope that the law would have been struck down, has delayed work on a state health insurance exchange, which would set up an online marketplace for patients and small businesses to shop for insurance policies. He has said the exchange won't be set up until after the November election, when he hopes voters will elect a Republican president and a Congress that would repeal the measure.

About 105,000 South Dakotans, or 13 percent of the state's population, didn't have health insurance in 2010, according to the U.S. Census Bureau. But based on state officials' own survey, they believe the number of uninsured is 71,000, or about 9 percent.

Daugaard said he is proud South Dakota joined with other states on the legal challenge.

"It is up to state leaders to stand up for the rights of our citizens when we believe the federal government steps beyond the bounds of the Constitution," the governor said.

The Supreme Court found problems with the law's expansion of Medicaid, a state-federal program that covers the medical costs of low-income people. However, the court said the expansion could proceed as long as the federal government does not threaten to withhold states' entire Medicaid allotment should a state not take part in the expansion.

South Dakota has resisted expanding Medicaid to cover more people because it would force the state to spend a total of $99 million in 2014-2019. During those six years, the federal government would pay much of the cost of direct medical care for people added to the program, but the state would be responsible for extra administrative costs.

Sen. John Thune, R-S.D., said he is disappointed with the Supreme Court's decision, but said Republicans in Congress will continue efforts to repeal the law and take other steps to improve health care.

South Dakota Democratic Sen. Tim Johnson said the ruling provides a foundation for Congress to continue working to reduce health care costs and make sure more Americans are insured.

"This is a huge win for South Dakotans and the nation. I have always believed health care reform was constitutional," he said.