No Medicaid expansion yet for Tenn.

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Arkansas and Ohio are pursuing similar alternative plans, hoping to use federal Medicaid dollars to help the uninsured buy private coverage. 

Federal health officials said Wednesday that they are still working with Haslam on an agreement.

The Affordable Care Act encourages states to extend Medicaid coverage to people living at or below 133 percent of the poverty line using mostly federal funding. The move is optional thanks to the Supreme Court's decision to uphold the law.

Eight Republican governors have signed on, in addition to 17 Democrats. But the policy faces a steep climb in some GOP-dominated state legislatures, where few back the healthcare law.

Legislators were preparing to consider a bill blocking the Medicaid expansion on Wednesday when Haslam made his announcement, signaling that even a compromise with the Health and Human Services (HHS) Department could be a tough sell with state lawmakers.

—This post was updated Thursday to reflect that Haslam and HHS are still working on an agreement.