Sebelius urges states to accept health law’s Medicaid expansion

Health and Human Services (HHS) Secretary Kathleen Sebelius on Tuesday urged governors to participate in the Affordable Care Act's (ACA) Medicaid expansion, which the Supreme Court said must be optional for states.

Sebelius also announced a new round of meetings for state and federal officials to discuss implementation of President Obama's healthcare law. Some conservative governors had been avoiding implementation until they knew how the Supreme Court would rule and eight, including most recently Texas Gov. Rick Perry (R), have already rejected the expansion.

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"Now that the Supreme Court has issued a decision, we want to work with you to achieve our ultimate shared goal of ensuring that every American has access to affordable, quality healthcare," Sebelius wrote in a letter to governors Tuesday.

The day after the Supreme Court announced its decision upholding the healthcare law, HHS rolled out new funding opportunities designed to jumpstart implementation even in states that had resisted any planning work. 

The department also adjusted its rules to let states continue receiving federal money until the end of 2014 — past the Jan. 1, 2014, deadline by which states are supposed to have their own insurance exchanges up and running.

The ACA directs each state to establish an exchange — a new marketplace where individuals and small businesses can buy insurance — and directs HHS to run a federal exchange in any state that does not establish its own. Federal regulators have pushed aggressively for state-based exchanges, and have offered to help with parts of the operation if states aren't prepared to do the whole thing themselves.

But Sebelius appeared to take a firmer tone on the law's Medicaid expansion. The ACA expands Medicaid to cover everyone at or below 133 percent of the federal poverty line. The Supreme Court said states must have the option of sitting out the expansion, the cost of which will be covered entirely by the federal government in the first few years.

Some Republican governors have said the ruling also allows them to cut their Medicaid rolls now, rather than comply with a "maintenance of effort" provision that freezes eligibility until 2014.

"The Supreme Court held that, if a state chooses not to participate in this expansion of Medicaid eligibility for low-income adults, the state may not, as a consequence, lose federal funding for its existing Medicaid program. The court’s decision did not affect other provisions of the law," Sebelius wrote.