Alaska won't seek U.S. health exchange grants
Alaska Governor Sean Parnell said on Thursday his state will not apply for federal grants to establish medical insurance exchanges under the newly enacted U.S. healthcare law because a Florida judge has ruled the legislation unconstitutional.

Parnell, a Republican who succeeded Sarah Palin as governor when the former Republican vice presidential nominee resigned in mid-term, won election to a four-year term in November.

In September, the U.S. Department of Health and Human Services awarded grants of up to $1 million to 48 states and the District of Columbia to prepare to set up the exchanges, an open market designed to offer individuals, families and small businesses affordable health insurance options.

The sweeping healthcare bill passed by Congress and signed into law by President Obama last year calls for insurance exchanges, aimed at lowering premiums through greater competition among insurers, to be established by 2014.

States are given the choice of starting their own exchanges, banding together to create regional ones or opting out entirely. If a state chooses not to set up its own, the federal government will step in to operate one instead.

Alaska is one of 26 states that joined Florida in bringing a legal challenge to the federal healthcare overhaul.

A Florida district judge on January 31 struck down as unconstitutional the law's mandate that individuals must buy health insurance. The issue is expected to go to the U.S. Supreme Court in future. Meanwhile, the law -- popularly known as "Obamacare" -- is still going into effect.

"The Florida court's declaratory judgment that the federal health care law is unconstitutional is the 'law of the land' as it applies to Alaska, and we will not proceed down an unlawful course to implement it," Parnell said in a statement posted on the governor's website.

Parnell told a meeting of the Juneau Chamber of Commerce on Thursday he had sought the advice of his attorney general in deciding not to implement federal healthcare reforms.

But he said the state's Division of Insurance was "reviewing the potential for developing a health insurance exchange without federal dollars."

Parnell said he directed state social welfare authorities to streamline enrollment for existing public assistance programs and to improve chronic care management and primary care access "for Alaska's most vulnerable citizens."

State Senator Hollis French, an Anchorage Democrat who chairs the Senate Judiciary Committee, called Parnell's decision "a bad move for Alaska, particularly with respect to some of the more popular reforms."

About 115,000 Alaskans, or 15 percent of the state's population, lack health insurance, French said.

French is sponsoring a bill in the state legislature that would establish a state exchange, which he said would cost about $5 million to set up.

At present just two companies control most of Alaska's private health insurance market, according to a spokeswoman for Alaska U.S. Senator Mark Begich, a Democrat.

(Writing and additional reporting by Steve Gorman. Editing by Peter Bohan)