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Obama says he will support letting states opt out of health-care law earlier

By Perry Bacon Jr. and Dan Balz
Washington Post Staff Writers
Monday, February 28, 2011; 8:35 PM

President Obama told a group of governors Monday that he would support moving up the timetable in which states may opt out of the federal health care law, making a major overture to critics of the legislation.

In his speech to the governors, who were attending the winter meeting of the National Governors Association, Obama said he would approve of allowing states to opt out of the Affordable Care Act by 2014 if they could offer health-care coverage for as many people as they would under the law and not increase the deficit. Under the original law, states could not opt until in 2017. Still, 2014 is a critical year, as many of the most important provisions of the bill, including the mandate, go into effect.

The new opt-out provision was first proposed by a bipartisan group of senators that included Sen. Scott Brown (R-Mass.) and Ron Wyden (D-Ore.).

"I think that's a reasonable proposal. I support it," Obama told governors of both parties assembled in the State Dining Room. "It will give you more flexibility more quickly, while still guaranteeing the American people reform. If your state can create a plan that covers as many people as affordably and comprehensively as the Affordable Care Act does - without increasing the deficit - you can implement that plan. And we'll work with you to do it."

Obama's move comes as a number of states, nearly all with Republican attorneys general, have filed suit to invalidate the law, arguing that requiring all Americans to purchase health insurance is unconstitutional. Three federal courts have ruled that the current law is constitutional, while two have struck it down.

The flexibility on opting out could appeal to Republicans both in Congress and in statehouses, who have been the main critics of the legislation. And some more liberal states, such as Oregon, have said they might consider alternative ways to expand insurance.

The governors said Obama's willingness to support an earlier opt-out from the law was welcome, but they stopped short of fully embracing it.

"A number of our fellow governors would be very interested in supporting this," said Gov. Christine Gregoire (D-Wash.), the current NGA chair. "We need to talk to them to see if we can put our support behind that bill as the National Governors Association. But I can assure you there is conservable interest among the governors."

The more flexibility in managing health care the better, Gov. Mary Fallin (R-Okla.) said. But "we'll see if it's going to be flexible enough."

Mississippi Gov. Haley Barbour (R) was also cautious. "The devil's in the details," he said. "We have to learn more about it before we know."

Kansas Gov. Sam Brownback (R-Kan.) opposed the health-care law while he was still in the Senate. He said the president's proposal doesn't negate what he and other Republicans see as a fatally flawed law. "This offers a little bit of flexibility, which I think is a positive thing, but it doesn't change the overall objection to the bill."

Brownback said he and others who are challenging the law in court will "implement what we're required to do" while continuing to fight it.

The provision would require the approval of Republicans in Congress, who opposed the original health-care law. House Majority Leader Eric Cantor (R-Va.) argued Monday that Obama's announcement only reinforces the case that the national health-care law impedes job growth.

"It is just making our point that not only have we seen a variety of exceptions and waivers issued for the private sector under the act, but now we're seeing how that act is troubling states in a real way as far as their trying to figure out the fiscal answer," Cantor told reporters at his weekly roundtable.

Asked whether the announcement is likely to change House Republicans' approach toward health-care reform, Cantor said that the GOP remains committed to repealing and replacing the law, with an emphasis on lowering costs.

"It is an unworkable structure, and it's something that needs to be addressed, and that is why we will continue ... to not only look to defund and delay the implementation of that act but to posit an alternative ... ," Cantor said.

Also at the White House meeting, Obama proposed the creation of a bipartisan group of governors to look at ways to reduce Medicaid costs in the short term, attempting to address a major concern of governors of both parties.

The new health-care law significantly expands the Medicaid program, adding up to 20 million more Americans. The costs of the program are shared between the federal and state governments. The federal government will pick up virtually all the cost of the expansion in the early years of the new law, but in later years the burden will fall to the states.

The governors, who have spent much of the weekend discussing the potentially crushing burden of rising Medicaid costs, reacted positively to Obama's call for proposals on how to offer some relief.

Gov. Jack Markell (D-Del.) said he was pleased that the president recognizes the financial burden on the states that changes in Medicaid will mean. "He wants to work with us," Markell said.

Gov. Chris Christie (R-N.J.), however, said that the president "said some very nice things, and he says them really nicely." But, "I didn't hear any real substance" that would suggest the governors will get what they want.

Virtually all governors want relief from the federal rules that govern the program, although there is widespread disagreement on how much is enough.

"I want the maximum flexibility," said Gov. Dave Heineman (R-Neb.), the NGA vice chair, a view shared by a number of Republicans. "Give me as a state the opportunity to determine more about the eligibility and benefits, and we'll be glad to run that program. That's the key for us."

For now, the governors will try to come to a consensus. Gregoire said the NGA would develop a bipartisan set of recommendations from the states and that she had appointed a committee of governors to produce those proposals for the administration as quickly as possible.

During the meeting, the president did not directly criticize any of the GOP governors, some of whom are considering challenging Obama in next year's presidential election. But he defended the health-care law, as well as his proposals to increase spending on light rail and other infrastructure projects, which some of the GOP governors have opposed.

"To those who say we can't afford new investments in infrastructure, I say we can't afford not to make investments in infrastructure," Obama said to a largely silent audience of governors, their aides and administration officials.

While not specifically mentioning recent budget fights between Republican governors and public employees in states such as Wisconsin, Obama warned that it would be hard to get Americans to enter fields such as teaching if federal and state workers are devalued.

"I don't think it does anybody any good when public employees are denigrated or vilified or their rights are infringed upon," Obama said.

The speech was open to reporters, but then turned into a closed-door session for the governors to ask questions of Obama.

Staff writer Felicia Sonmez contributed to this report.

baconp@washpost.com balzd@washpost.com sonmezf@washpost.com

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