Gov. Sean Parnell, left, and Health and Human Services Commissioner William Streur appear at a news conference in Anchorage on Friday, Nov. 15, 2013. Parnell rejected calls to expand Medicaid in Alaska despite mounting pressure from health, advocacy and business organizations in the state. (AP Photo/Mark Thiessen)

Alaska Gov. Sean Parnell (R) said Friday his state will not expand Medicaid under President Obama’s signature health-care law after a report estimated it would cost the state about $200 million over seven years.

“I believe a costly Medicaid expansion, especially on top of the broken Obamacare system, is a hot mess,” Parnell said at a news conference on Friday. “The bottom line is: Obamacare failed to launch, is failing to deliver on its promises, and remains in disarray. We simply cannot bail out this failed experiment by expanding Medicaid.”

Groups ranging from the Alaska Chamber of Commerce to the Alaska Federation of Natives and the Alaska Native Tribal Health Consortium had pushed Parnell to move toward expanding Medicaid. But Parnell, who is seeking reelection in 2014, won praise from state Republicans, who oppose expansion.

Expanding Medicaid in Alaska would have made about 40,000 residents with an income of 138 percent of the federal poverty level or less eligible for coverage. The federal government would have initially provided 100 percent of the costs of an expansion, dropping to 90 percent by 2020.

But the federal government would have covered more of the costs in Alaska than in other states, because the federal government covers 100 percent of the costs for Native Americans in Alaska, according to the Anchorage Daily News. About 17,000 of the 40,000 who would have been eligible under the expansion are Alaska Natives.

The study, conducted by the Virginia-based Lewin Group, estimated the costs to Alaska would be dwarfed by the $2.9 billion in extra federal funding for Alaska. Costs to the state would be just 1.4 percent of total Medicaid costs between 2014 and 2020.

But Parnell said Medicaid is already his state’s largest expenditure. Medicaid covers about 140,000 Alaskans at a cost of about $1.5 billion per year. That cost is likely to increase to $2.5 billion per year by 2020 even without the expansion, Parnell said.

“What’s become clear is that Medicaid expansion is a bigger, more far-reaching decision than most appreciate,” Parnell said.

Despite opting against expanding the program, Alaska’s Medicaid spending will increase by between $11.1 million and $39.9 million over the next seven years, The Lewin Group study found. And about 20,000 residents living below the federal poverty limit would still be ineligible for coverage because they wouldn’t qualify for federal subsidies under the Affordable Care Act.

Parnell said he would create a state commission, the Alaska Medicaid Reform Advisory Group, to develop a plan to improve stability in Medicaid costs, increase efficiency and improve care. He also directed Alaska’s Health and Social Services Commissioner to report on the status of thousands of Alaskans who are eligible for Medicaid but who have not enrolled.