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Sebelius Says Some Low-Income Americans Won't Face Health Care Law Penalty

By Rebecca Adams, CQ HealthBeat Associate Editor

July 11, 2012 -- If a state decides to opt out of the health care law's Medicaid expansion, its low-income residents who would then not be eligible to enroll in the health care program for the poor could get a hardship exemption from the overhaul's individual mandate, Health and Human Services (HHS) Secretary Kathleen Sebelius said in a letter to governors last week.

HHS officials also are responding to governors' threats to forego the expansion of Medicaid and sharp questions about implementing the health care law (PL 111-148, PL 111-152) by scheduling four information sessions around the country this summer.

Sebelius said her department would exercise authority in the overhaul law "to establish any hardship exemption that may be needed" to allow more low-income people to avoid the individual mandate to get health care coverage.

She also said that the Supreme Court's decision last month that allows states to opt out of the Medicaid expansion without losing all of its funds for its existing program "did not affect other provisions." For example, she said that the federal government is still expected to provide full federal funding for newly eligible people in the years 2014-16 but less than that in future years.

An administration official said that the requirements that remain intact include provisions requiring states to maintain eligibility for adults until 2014. Some states had questioned whether the ruling frees them from the maintenance of effort provisions, but HHS officials are holding firm in their interpretation that those requirements are not impacted by the court's decision.

"I am mindful of the concerns that some governors have shared about the law," Sebelius said in her letter.

The Republican Governors Association sent a letter last week outlining some of those concerns.

In her letter, Sebelius encouraged governors to send officials to the forums and continue asking questions through regularly scheduled conference calls. The sessions will be held July 31 through Aug. 15 in Washington, D.C.; Chicago; Denver; and Atlanta.

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