Iowa Gov. Terry Branstad has reached an agreement with the Obama administration to approve the Iowa Health and Wellness Plan, his office said Thursday.
The plan would expand Medicaid in the state, a key part of implementing the Affordable Care Act in the state.
The development relieves uncertainty for thousands of people who are expecting insurance coverage at the beginning of the year, and it allows the state to move forward with the bipartisan initiative worked out earlier this year with the state Legislature.
Branstad hailed the agreement whose final details his office said were still being worked out. An official said that would be done by the end of the year.
"This is an Iowa plan that fits the health needs of our state," the governor said in a statement. Eventually, 150,000 Iowans will be covered, he said.
The plan would essentially expand Medicaid for the state's non-elderly population who are below the poverty line, about $11,500 a year for an individual.
People making between that amount and $15,900, or 138 percent of poverty, would have to shop for private coverage in the online marketplace, with their premiums to be paid by the government.
Thursday's announcement resolved an apparent disconnect between the Branstad administration and the administration over the state's plan to charge a premium to people who enroll.
The governor's office said Thursday the state will be allowed to charge a small amount to people whose incomes are above 50 percent of the federal poverty line. But the person would not lose insurance coverage if they don't pay it.
The state would, however, pursue payment as a debt if the person continued seeking medical coverage.
The Obama administration's partial approval of the state's plan earlier this week said a premium could be charged only to people above the poverty line.
Critics worried it would impose a hardship on people who make so little money.
The premium would be levied only in the event a person doesn't engage in certain healthy behaviors, such as getting a risk assessment or an annual physical. And it would be waived the first year, meaning a person wouldn't have to pay it as long as he or she continued engaging in healthy behaviors.
Branstad's office did say that people above the poverty line would still lose coverage if they failed to pay the premium.
A request for confirmation of the agreement from the Obama administration wasn't immediately answered Thursday.
The expansion of Medicaid is a key part of the Affordable Care Act.
When the law was written, states were required to expand their programs or face the loss of current funding. The Supreme Court, however, overturned that part of the law while upholding its overall constitutionality.
That has led states with Republican governors to reject the expansion, even though the federal government is paying the cost for the first three years. After that, federal reimbursement gradually falls to 90 percent.
Branstad initially resisted expanding the program, too. But Democrats and a coalition of hospitals and others pushed for it.
Legislative Democrats and Republicans forged a deal along with the governor to formulate the Iowa Health and Wellness Plan.Iowa Sen. Jack Hatch, D-Des Moines, said Thursday the announcement means Iowa "crossed the finish line" and that it "demonstrates how citizens speaking up can really make a difference.”