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North Carolina's Medicaid program too troubled to expand: Governor

(Reuters) - North Carolina will not expand Medicaid coverage under President Barack Obama's signature healthcare reform law and will play no role in setting up the required health insurance exchange, Governor Pat McCrory said on Tuesday.

"The current system in North Carolina is broken and not ready to expand without great risk to the taxpayers and to the delivery of existing services to those in need," said McCrory, a Republican elected in November.

Last summer, the Supreme Court ruled that states cannot be compelled to expand Medicaid.

The Patient Protection and Affordable Care Act, known as Obamacare, is intended to bring 16 million uninsured people into the $2.8 trillion U.S. healthcare system. The expansion would revolutionize the program, which in many states is now limited mainly to children, pregnant women and the elderly. Under the reform law, Washington would fund more than 90 percent of the expansion.

But many governors worry that the current fight over the federal budget deficit could cut funding for Medicaid.

"There is long-term concern regarding the federal government's continuing of its obligation for matching funds," McCrory said.

Lawmakers and Obama are trying to reach an agreement to stop $1.2 trillion in across-the board spending cuts to the U.S. budget that go into effect on March 1. Some states believe that those negotiations could result in cuts to Medicaid funding.

"About half the states have already said they'll expand Medicaid and many others are still deliberating," said Health and Human Services Secretary Kathleen Sebelius on Tuesday at the American Medical Association conference in Washington.

Medicaid is fast becoming a budget buster for almost all states and can take up to a third of a state's budget.

McCrory said North Carolina was not prepared to create a state-operated exchange where individuals can buy health insurance, another key component of Obamacare.

The law gave states the alternatives of banding together with neighbors to create exchanges or not running one at all and handing responsibilities for the exchanges completely to the federal government.

Republican lawmakers consider Obamacare an infringement on states' rights and many conservative governors are only carrying out its bare minimum requirements.

Still, some Republican governors have warmed to the expansion. Arizona Governor Jan Brewer, one of the most conservative leaders in the country, is moving her state to extend Medicaid coverage, but is advocating for an automatic halt to the expansion if the federal reimbursements decrease.

(Reporting by Lisa Lambert in Washington; Additional reporting by David Morgan; Editing by Lisa Shumaker)

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