South Carolina will reject federal money for establishing an insurance exchange established by a 2010 health care law championed by President Barack Obama and passed in Congress after a sharply polarized debate that may figure in the 2012 election.

South Carolina’s head of its health and human services department says he worries that the state will become a “back office” for the insurance industry, Reuters reported.

“We’re not planning on taking any further money for the exchanges,” said Tony Keck, the head of the state’s South Carolina said on Thursday.

“We are worried that the federal government seems to be saying that states should become the back office managers for the private insurance market and we’re sure that’s not a good use for the state resources,” he said.

States have until the start of 2013 to submit plans for exchanges, or else the federal government will create them. The federal government is giving $1 million in for planning grants so states can research options for creating the exchanges.

South Carolina will skip this step, the report states.

Oklahoma and Kansas have returned money for such exchanges.

Keck said the state is considering setting up a private exchange that meets the requirements of the law.

“The (federal) dollars really bother me,” he said. “It comes with strings attached and then, all of a sudden, their agenda is your agenda.”