Republican Governors Threaten to Leave Health Exchanges to U.S.

Republican governors said they may ask the federal government to run the exchanges where residents will buy medical insurance in 2014 under the new health-care law, unless they’re given more flexibility.

Twenty-one Republicans sent a letter to Health and Human Services Secretary Kathleen Sebelius today asking that they be given greater sway to set benefit rules, decide which insurers are allowed to sell plans on their exchanges and force residents who would otherwise be covered by Medicaid to buy their own insurance.

The letter is the second time in as many months that Republican governors have pressed the Obama administration to alter the health-care overhaul signed in March, which is also the subject of court challenges by states attorney general.

States are required to develop the exchanges and prepare for more residents to participate in Medicaid, the health-care program for the poor that will be expanded, with federal help, to cover more of the uninsured.

The law “in its current form threatens to destroy our budgets and perpetuate and magnify the most costly aspects of our health-care system,” the letter says. “While we hope for your endorsement, if you do not agree, we will move forward with our own efforts regardless and HHS should begin making plans to run exchanges under its own auspices.”

Last month, the group asked the federal government to waive rules that prevent them from cutting the number of residents who now qualify for Medicaid. The governors said the rising cost of the program will force them to cut other state programs as they struggle to close budget shortfalls that have lingered in the wake of the 18-month recession.

Jessica Santillo, a spokeswoman for the Health and Human Services Department, said in an e-mail statement that the administration has “made clear we will consider different models that fit states’ needs” and that it looks “forward to continuing to build a constructive partnership with governors and state leaders.”

To contact the reporters on this story: William Selway in Washington at wselway@bloomberg.net

To contact the editor responsible for this story: Mark Tannenbaum at mtannen@bloomberg.net

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