Corbett backs alternate ObamaCare Medicaid plan

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The plan must be approved by the state legislature and the Health and Human Services (HHS) Department. It mirrors proposals out of Arkansas and Iowa that would use Medicaid expansion funds to enroll patients in the new exchanges.

In announcing his plan, Corbett called traditional Medicaid "broken" and "financially unsustainable," echoing common conservative criticisms of the joint federal and state program.

"I will not accept Washington's 'one-size-fits-all' approach for Pennsylvania, and I will not expand an entitlement," said Corbett, who is expected to receive a strong challenge from the left in next year's election.

The Medicaid expansion became optional for states under last year's Supreme Court ruling on ObamaCare.

Twenty-six states are now pursuing the policy, which would provide healthcare coverage to people making up to 133 of the federal poverty level — about $15,000 for a single person and $32,000 for a family of four. The federal government will foot most of the expansion's cost. 

Centers for Medicare and Medicaid Services spokeswoman Emma Sandoe said federal health officials are "encouraged" by Corbett's proposal.

"As we have done with other states, we are eager to work with Pennsylvania to provide the best options that work for Pennsylvanians," Sandoe said in a statement. 

"HHS stands ready to work with states to explore options that improve care and lower costs in the Medicaid program."