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Oklahoma is second state allowed to extend health plan outside Obamacare

A Tea Party member reaches for a pamphlet titled "The Impact of Obamacare", at a "Food for Free Minds Tea Party Rally" in Littleton, New Ham
A Tea Party member reaches for a pamphlet titled "The Impact of Obamacare", at a "Food for Free Minds Tea Party Rally" in Littleton, New Ham

By Heide Brandes

OKLAHOMA CITY (Reuters) - The federal government has granted Oklahoma a one-year extension to operate its own healthcare program, Governor Mary Fallin said on Friday, making it the second state this week to receive such an exception under President Barack Obama's medical reform law.

Oklahoma is one of several Republican-led states that have rejected federal government incentives to expand the Medicaid healthcare program for the poor and declined to set up its own health insurance exchange for consumers to shop for insurance.

Fallin, who has repeatedly rejected the Affordable Care Act, said Oklahoma had negotiated an extension through 2014 for its Insure Oklahoma program.

The program created in 2005 provides health insurance for nearly 30,000 low-income, working residents, both individually and for those working for participating small businesses.

"It's been a success for tens of thousands of families of modest means, who would be uninsured without it," Fallin said in a statement, adding that she hoped the federal government would review the program and make its support permanent.

The state program subsidizes private health insurance with funding from a tobacco tax matched with federal dollars. The federal government had said earlier in 2013 it would discontinue support and the program would expire at the end of the year.

Under the agreement, about 8,000 people currently enrolled in the state program with incomes between 100 percent and 200 percent of the federal poverty line will be covered under the federally created health insurance marketplace.

"We look forward to working with Oklahoma and all other states in bringing a flexible, state-based approach to Medicaid coverage expansion and encourage the state to explore these options," Health and Human Services spokeswoman Emma Sandoe said on Friday.

Indiana Governor Mike Pence on Tuesday said the federal government had granted a one-year waiver allowing his state to continue operating its own health program, called the Healthy Indiana Plan, which has been operating since 2008.

Indiana's plan offers health insurance to about 37,000 people who do not qualify for Medicaid, including childless adults aged 19 to 64. It is based on high-deductible health plans and tax-free health savings accounts.

Iowa and Arkansas have sought waivers to use funds available under Medicaid expansion to provide subsidies for buying insurance on the new state-based exchanges. These exchanges will open next month to sell insurance for 2014.

About half of U.S. states currently offer programs similar to Oklahoma's that cover childless adults. Under Medicaid expansion, the federal government will pay for three years to extend benefits to people with incomes at 133 percent of the federal poverty level and pay 90 percent of the cost after that.

(Reporting by Heide Brandes in Oklahoma City, Caroline Humer and David Bailey; Editing by Greg McCune and Chizu Nomiyama)

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