June 22, 2010 / 7:49 PM / 9 years ago

Minnesota won't expand Medicaid coverage until 2014

WASHINGTON (Reuters) - Republican governors continue to resist the U.S. healthcare reform that was signed into law three months ago, with Minnesota’s Tim Pawlenty announcing on Tuesday that his state will not expand its Medicaid program until 2014.

The reform law made more people eligible to sign up for Medicaid, the healthcare program for the poor administered by states and the federal government, starting in 2014.

When states balked at the cost, the U.S. Congress created a caveat whereby the federal government will pay the total costs of new enrollees for the first few years.

It also allowed states to begin enrolling those who came under the expanded criteria earlier than 2014, a move that Pawlenty said would cost Minnesota $430 million over the next three years.

“Signing Minnesota up early for this entitlement program would strain the state budget and put us at significant risk,” Pawlenty, a possible Republican presidential candidate in 2012, said in a statement.

After the battle in Congress over the healthcare plan, the fight has now moved to the state level where Republican governors are trying to stop the implementation, mostly blaming costs.

Two Minnesota state legislators, both Democrats, said delaying the Medicaid expansion will end up costing the state more.

The delay “prevents Minnesota from capturing a federal match for state dollars we are already spending. Patients will still show up in our hospitals, but the cost of care will be passed onto middle-class families through higher health care premiums,” said state Representative Tom Huntley, a Democrat.

Minnesota already spends money on treating many of those who qualify for the extended Medicaid, but does not receive a federal reimbursement currently, said Representative Erin Murphy, adding the reimbursements could garner Minnesota $1.4 billion.

Last week, Indiana Governor Mitch Daniels said his state was having doubts about establishing the insurance exchanges created in the law, citing vague regulations and high administrative costs.

Next week, the U.S. District Court for the Eastern District Court of Virginia will hear oral arguments on the Obama administration’s motion to dismiss Virginia’s lawsuit against the healthcare plan.

The state has sued, saying that the law’s requirement that citizens buy health insurance is unconstitutional.

In a filing late Tuesday, the U.S. government said the Constitution gives it the right to fine those who do not have health insurance. It added that individuals who object to the requirement can challenge the fines and sue for a refund, and so the state does not need to sue.

The federal government also said that individuals whose incomes are so low they do not pay income taxes will not be subject to the fines.

Reporting by Lisa Lambert, additional reporting by Jeremy Pelofsky; Editing by Gary Crosse and Leslie Adler

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