Gov. Mary Fallin rejected state participation in a health-care exchange and expansion of the state's Medicaid program under the Affordable Care Act on Monday.

The decision means Oklahoma will not do anything to accommodate the federal health-care law known as "Obamacare." It also means the state will skip an opportunity to help some 693,000 uninsured Oklahomans, 18.7 percent of the state population, get coverage through the federal government.

"After careful consideration, I have today informed U.S. Secretary of Health Kathleen Sebelius that Oklahoma will not pursue the creation of its own health insurance exchange," Fallin said. "Furthermore, I have also decided that Oklahoma will not be participating in the Obama administration's proposed expansion of Medicaid."

Any exchange that is compliant with the federal health-care law would necessarily be state-run in name only and would require Oklahoma resources, staff and tax dollars to implement, Fallin said.

"It does not benefit Oklahoma taxpayers to actively support and fund a new government program that will ultimately be under the control of the federal government, that is opposed by a clear majority of Oklahomans and that will further the implementation of a law that threatens to erode both the quality of American health care and the fiscal stability of the nation," she said.

Medicaid expansion could cost the state up to $475 million between now and 2020, with escalating annual expenses in subsequent years, Fallin said.

The Affordable Care Act promises that 100 percent of the cost of newly eligible Medicaid patients would be federally funded for the first three years, but Fallin said economic realities put that promise in doubt.

"The federal government's broke," Fallin said in an telephone interview with the Tulsa World. "Just because the federal government says they may do something in the future, even with Obamacare, doesn't mean it's going to be there because that fact is we have a huge deficit and a big fiscal crisis in our nation."

Expanding the state's Medicaid program would come with some state expenses, and that is money that won't be available for other priorities, including education and transportation, she said.

"I can't print money, unlike the federal government," Fallin said. "I have to balance our budget. I have to live within our means."

Fallin's decision means the federal government will set up a health insurance exchange in the state that will start selling federally subsidized private insurance plans to people who earn between 133 percent and 400 percent of the federal poverty level -- $30,657 to $92,200 for a family of four under current standards.

But her decision not to accept the Medicaid expansion means there will be a coverage gap for people who earn too much to be eligible for the state's existing Medicaid plan or are categorically ineligible for the program but earn less than 133 percent of the federal poverty level.

For example, a single, 19-year-old man who earns $15,400 a year would be eligible for a $2,921 federal subsidy on a $3,391 insurance plan, according to figures developed by the Henry J. Kaiser Family Foundation.

But without the Medicaid expansion, the same man would get nothing if he earned $100 a year less.

Fallin acknowledged that gaps are possible and said the state may be able to seek solutions by expanding the Insure Oklahoma program, which is funded with federal Medicaid money and state tobacco tax revenue, or through Medicaid waivers.

"The reality is there have always been some gaps in the system, and we're actually trying to address some of those needs," Fallin said.

Oklahoma Hospital Association President Craig Jones said his group was disappointed by the governor's decisions.

Cuts to future hospital funding increases to fund the Affordable Care Act will mean state hospitals will receive $1.6 billion less through 2020 without the Medicaid money coming in to make up the difference, he said.

"The reluctance to expand Medicaid here in Oklahoma means that cuts experienced by Oklahoma hospitals for patient care will be used to provide expanded coverage in other states," Jones said.

Fallin said the decision was made after working with legislators, stakeholders and health-care experts from around the country.

She spoke directly with Sebelius, the Health and Human Services secretary, about the issue and told her that Republican and Democratic governors were frustrated with the lack of clear answers to key questions on the issues.

Sebelius said some of those questions don't have answers yet, Fallin said.

"You're asking us to make long-impacting decisions about the finances of our state without give us the rules of the game, and that's hard to do," Fallin said she told Sebelius.

GOP legislative leaders backed Fallin's decision.

"Oklahomans simply do not want anything to do with Obamacare, and Senate Republicans stand firmly with Gov. Fallin in rejecting it," said Senate President Pro Tem Brian Bingman, R-Sapulpa. "We want real, conservative solutions to the rising cost of health care. We want to make care more accessible, more affordable and easier to obtain.

"I continue to believe Obamacare will fall short of accomplishing these goals -- but it will certainly accomplish one of President Obama's goals: to grow government and redefine its size, scope, and reach into the lives of our fellow Oklahomans." Speaker of the House-Elect T.W. Shannon, R-Lawton, also applauded Fallin's decision.

"It is increasingly evident that reform will come from the state level," Shannon said. "Oklahoma has drawn a line in the sand, and I am proud to stand with Gov. Fallin and our citizens to continue leading the fight against a federal government that increasingly overreaches and tramples the rights of individuals and the states."

But Democratic lawmakers said they will look for ways to force the issues to a vote in next year's Legislature and will place the blame for the state's failure to move ahead in health-care coverage on the governor.

"On behalf of the hundreds of thousands of uninsured Oklahomans and the businesses, doctors and hospitals who provide for millions of dollars worth of uncompensated care, the House Democratic caucus is deeply disappointed," said Rep. Scott Inman, D-Oklahoma City.

Sen. Sean Burrage, D-Claremore, said Fallin's decision on the exchange means the state has lost its chance to shape its own future. Instead, federal bureaucrats will be making key decisions about the state's health-care future, he said.

Inman said the governor was playing politics with the health and finances of poor Oklahomans, which he finds frustrating.

Fallin said her decision was based on policy, not politics. If she were trying to do the politically expedient thing, she would have come out against Obamacare programs long ago, instead of taking criticism from conservative members of her own party while she considered the best options for the state, she said.

"I have to make our decision based on what's best for our state budget, what's best for our state," she said.

(c)2012 Tulsa World (Tulsa, Okla.)