Tue, Jul 17 2012 ANCHORAGE (Reuters) — Alaska will not set up a program allowing residents to buy health insurance across state lines as envisioned under the Obama administration's new health care law, leaving that task to the U.S. government, Gov. Sean Parnell announced Tuesday.

It is too expensive for the state to set up an insurance-exchange program, as required by the Patient Protection and Affordable Care Act, said Parnell, a Republican who has been a critic of the Obama administration's new health care law.

Instead, the federal government should bear the responsibility of creating and running the exchange, Parnell said.

"Allocating state dollars and personnel to design and implement an exchange is the most expensive option," Parnell said in a written statement.

"It doesn't make sense to spend Alaskans' dollars to set up an exchange when so much uncertainty exists about how to implement it and how to gain federal approval. Federally mandated programs should be paid for by federal dollars.

"Under the health care law, states must have insurance exchanges in place by 2014. If states decline to set up their own exchanges, the federal government will establish an exchange.

Alaska, at Parnell's direction, was one of the states that sued to overturn the health care law.

The U.S. Supreme Court last month upheld the U.S. health care overhaul, but allowed states to opt out of the provision to expand the Medicaid program for the poor, which is jointly funded by federal and state governments and represents the biggest spending item in most state budgets.

Five Republican governors have said publicly they will refuse the broader eligibility criteria that aims to provide insurance to an additional 16 million Americans nationwide.

Alaska has not made a decision on expanding Medicaid, said Sharon Leighow, Parnell's press secretary.

(Editing by Dan Whitcomb and Lisa Shumaker)

© 2011 Thomson Reuters. Click for Restrictions.

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