Alaska Cites Court Ruling in Refusing Federal Health-Care Money

Alaska Governor Sean Parnell, saying he’s bound by law, won’t apply for federal grants needed to implement President Barack Obama’s health-care overhaul after a federal judge in Florida ruled it unconstitutional.

The Republican’s decision means the state will skip today’s deadline to apply for a grant that federal officials say is needed to develop exchanges where residents would be able to buy medical insurance under the new health-care law.

The Patient Protection and Affordable Care Act signed by Obama in March requires citizens over 18 to obtain health coverage beginning in 2014. U.S. District Judge Roger Vinson in Pensacola, Florida, ruled that requiring such coverage exceeded Congress’s power and invalidated the law last month. The decision came in a challenge brought by 26 states, including Alaska.

“We will not proceed down an unlawful course to implement this law,” Parnell said yesterday in Juneau, the capital. “The court’s declaratory judgment that the federal health-care law is unconstitutional is the law of the land as it applies to Alaska.”

Parnell has been governor since Sarah Palin quit in 2009 after her failed bid for U.S. vice president. He was lieutenant governor under Palin. Republican governors Rick Scott of Florida, Jan Brewer of Arizona and Rick Perry of Texas have said the court ruling was grounds to stop implementing the law.

Florida, which applied for the grant even though it was party to the lawsuit, won’t accept $1 million intended to help it get ready, Insurance Commissioner Kevin McCarty said in a letter to federal officials.

The Obama administration might sue Parnell to force him to implement the law, said Adam Winkler, a law professor at the University of California, Los Angeles.

‘Political Theater’

“It’s political theater,” Winkler said yesterday in a telephone interview. “States cannot decide that federal laws don’t apply in their state. There’s a provision in the Constitution that says federal law is supreme. So the state cannot chose to ignore federal law or refuse to implement it.”

Three other federal judges in Virginia and Michigan have issued decisions on the law, two affirming its legality and one striking it down in part, paving the way for an appeals battle that may ultimately be settled by the U.S. Supreme Court.

The actions of a single state won’t impede the Obama administration as it carries out the law, said Gail Wilensky, former administrator of the U.S. Health Care Financing Administration.

Federal Backup

There is, “in some cases, federal backup activity that will go into effect if the states don’t do their part,” Wilensky, a senior fellow at the health-education foundation Project Hope in Millwood, Virginia, said by telephone yesterday.

Federal authorities may set up such systems in states that don’t do it themselves, Wilensky said. The law requires states to participate in an expansion of Medicaid, the joint federal- state health program for the poor, by an estimated 16 million people starting in 2014.

In a letter to Obama, 21 Republican governors said they refuse to create exchanges unless U.S. officials gives them “complete flexibility.” Parnell didn’t sign the Feb. 7 letter.

During testimony to the U.S. House Ways and Means Committee on Feb. 16, Health and Human Services Secretary Kathleen Sebelius disputed complaints about the ability of states to fine-tune the overhaul.

‘Enormous Flexibility"

“There’s enormous flexibility” in the program, such as the ability of states to determine which health-insurance companies are permitted to sell plans on the exchanges, she said.

“I’m working very closely with governors,” she said, according to a transcript.

The Health and Human Services Department awarded $241 million in grants this week to assist Kansas, Maryland, New York, Oklahoma, Oregon, Wisconsin, and to a group of New England states through the University of Massachusetts Medical School in Worcester.

Jessica Santillo, a spokeswoman for the Health and Human Services, didn’t respond to an e-mail requesting comment.

To contact the reporter on this story: Michael Marois in Sacramento at mmarois@bloomberg.net

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

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