Mississippi on Friday became the first state to have its proposal for a health insurance exchange rejected by the government, and federal officials said Republican Governor Phil Bryant's opposition to the plan was to blame.
"With a lack of support from your governor and no formal commitment to coordinate from other state agencies, we do not see a feasible pathway to conditionally approving a state-based exchange in Mississippi for 2014," the U.S. Department of Health and Human Services said in a letter to the state.
Mississippi Insurance Commissioner Mike Chaney, a Republican, had waged a bitter battle with Bryant and other fellow party leaders in his state over implementing a state-run health insurance exchange.
The exchanges are a central provision of Democratic President Barack Obama's Patient Protection and Affordable Care Act. Under the law, all states must have fully operational health insurance exchanges by January 1, 2014.
Bryant opposes a state-run system, saying it opens the door to the Affordable Care Act, commonly referred to by critics as "Obamacare." The governor has said it will shackle the state with debt related to inflated Medicaid rolls.
Chaney also opposes the federal healthcare reform law. But he has argued a state-run system would let Mississippi control its own insurance market, saving thousands of jobs and millions of dollars in the long run.
The commissioner has been working on the exchange for years and became a resource for other states trying to devise their own plans. Mississippi submitted its proposal to the federal government in November.
Chaney's office said it would have further comment on the matter later on Friday.
An exchange allows consumers to compare plans provided by health care providers in an effort to make them more transparent and get more people enrolled. If states fail to implement their own exchanges, the federal government will do it for them.
Seventeen states and the District of Columbia have received conditional approval to establish their own state exchanges.
States have the choice of rejecting the exchange provision outright, or following Delaware and Arkansas by participating in federal partnership exchanges that would allow them to manage insurance plans and aid consumers.
The deadline for states to declare their intentions to run federal partnership exchanges is February 15. The Health and Human Services Department said on Friday that it considered Mississippi "an excellent candidate" for that model.