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U.S. approves health exchanges in four Republican-governed states

WASHINGTON (Reuters) - U.S. officials on Thursday gave four states currently governed by Republicans the green light to set up their own health insurance exchanges under President Barack Obama's healthcare reform law, an initiative largely opposed by Republicans.

The U.S. Department of Health and Human Services said Idaho, Nevada, New Mexico and Utah joined a list totaling 17 states and the District of Columbia that have all won conditional approval to establish their own state exchanges, with operations set to begin on January 1, 2014.

A fifth Republican-governed state, Mississippi, applied to operate a state exchange, but has not received approval because of a dispute about how much authority state officials should exercise over the operations of its prospective online marketplace, officials said.

The U.S. administration also cleared an exchange that Arkansas plans to run in partnership with the federal government. Delaware received approval for a similar partnership exchange late last year. Both Arkansas and Delaware have Democratic governors.

Health exchanges are a central provision of Obama's Patient Protection and Affordable Care Act. The marketplaces would extend health coverage to an estimated 16 million uninsured people by allowing them to purchase private insurance at prices subsidized by federal tax credits.

In a conference call with reporters, U.S. Health and Human Services Secretary Kathleen Sebelius welcomed the advent of exchanges as "a brand new day" for U.S. healthcare that would "drive down costs" for consumers through competition.

But the plan is opposed by many Republicans, including Republican state governors, who view the healthcare law as a costly and unnecessary expansion of government bureaucracy.

The federal government is likely to end up operating exchanges in at least 32 states that have not applied to run their own. States have the choice of rejecting the exchange provision outright, or following Delaware and Arkansas by participating in federal partnership exchanges that would allow them to manage insurance plans and aid consumers.

The deadline for states to declare their intentions to run federal partnership exchanges is February 15.

Oklahoma, which rejected Obama's healthcare reforms, is asking a U.S. judge to prevent the administration from using tax credits to subsidize insurance sold in any federal exchange operating within its borders.

U.S. officials could not predict how long it might take to clarify Mississippi's status. But they said states that are unable to begin open enrollment by October can apply in November to run their own marketplaces in 2015.

"We will continue to work with (Mississippi) state officials as they determine how best to resolve these issues," Gary Cohen, the U.S. official leading the administration's exchange implementation effort, told reporters.

(Reporting by David Morgan. Editing by Andre Grenon)

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