02/05/2013 05:36 pm ET Updated Apr 07, 2013

Utah Health Insurance Exchange Won't Seek Federal Approval Under Obamacare

Looks like Utah won't be running its own Obamacare health insurance exchange after all.

Utah Gov. Gary Herbert (R) effectively withdrew his state's bid to incorporate the state's existing small-business health insurance marketplace into President Barack Obama's health care reform law after a meeting in Washington with Health and Human Services Secretary Kathleen Sebelius Tuesday, the Salt Lake Tribune reports.

In a way, the outcome isn't terribly surprising. Utah's seven-year-old health insurance exchange, Avenue H, doesn't provide crucial functions that Obamacare exchanges must perform, including allowing people to use them to enroll in Medicaid.

Herbert never seemed keen to make the wholesale changes required to make Avenue H compliant with Obamacare's rules. Herbert even wanted Obama to declare Avenue H as a model other states could follow despite its smaller scale and lesser reach. And Herbert's fellow Republicans in the state legislature didn't like the idea of cooperating with Obama on health care, according to the Salt Lake Tribune.

Plus, the Obama administration can't just ignore the health care reform law's rules for health insurance exchanges no matter how many GOP governors it wants to bring into the fold. Just four of the states taking charge of health insurance exchanges are run by Republicans.

Instead of operating its own Obamacare exchange, Utah is on track to be the eighth state to work in partnership with the federal government. Twenty-five states completely deferred to the Obama administration while 18 states and the District of Columbia plan to administer health insurance exchanges themselves. In Utah's case, it's likely Avenue H will continue to serve small business and the federal government will deal with individuals.

The health care reform law's health insurance exchanges, also called marketplaces, are designed to allow small employers and anyone who doesn't get health benefits at work to comparison shop for health plans and to discover whether they qualify for financial assistance or Medicaid coverage.

In states that expand Medicaid, the health care reform law will provide benefits to anyone earning up to 133 percent of the federal poverty level -- $15,282 for a single person this year -- and offers tax credits for private health insurance to those who earn from the poverty level, $11,490 for an individual this year, to four times that amount.

Utah hasn't decided whether to participate in the Medicaid expansion. So far, the chief executives of 20 states and the District of Columbia support the Medicaid expansion, including Ohio Gov. John Kasich and four other Republican governors. Eleven Republican governors, including Pennsylvania's Tom Corbett, don't want to make Medicaid available to more of their states' poorest residents.