Governors warn Congress of healthcare reform law's costs

The administration is walking a fine line on the issue, as state executives threaten tax increases and massive cuts to education and social services if they have to meet the law's requirements. At the same time, the White House is reluctant to weaken its signature domestic achievement by allowing states to offer weaker benefits than called for by the law.

Obama's Department of Health and Human Services has been cautiously offering states more flexibility to run their Medicaid programs, but has fallen short of Republicans' request of a block grant to do with as they want. Medicaid advocates packed the hearing room Tuesday and have made it clear that doing so would be unacceptable.

"While there is no doubt that these state budget problems are serious and warrant attention, taking health care away from millions of American seniors and children is the wrong response," a coalition of several dozen groups wrote to lawmakers Tuesday. "What the Governors propose would undercut the remarkable gains we've made in recent years in insuring our nation's children and imperil the availability of long-term services and supports for seniors and people with disabilities."

Gov. Deval Patrick (D-Mass.) offered a counterweight, saying the law's tax credits for businesses, payment incentives for quality care and other benefits would be a boon to his state.

"The Affordable Care Act is good for America," he testified, "and deserves a chance to be implemented."