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Carrying out the threat could be difficult, Haislmaier said.

“From a political standpoint it is interesting whether the Obama administration has really thought through the implications,” he said.

Possible compromises or half-measures could settle the matter.

Indiana Gov. Mitch Daniels, who did not push for the Planned Parenthood law, could ask state lawmakers to repeal it. The federal court in Indianapolis that is hearing Planned Parenthood’s legal challenge could block the law from going into effect, buying time for changes.

The federal Medicaid statute also gives HHS Secretary Kathleen Sebelius latitude to withhold only a portion of Indiana’s Medicaid dollars, cushioning the impact.

Senate Appropriations Chairman Sen. Luke Kenley, a Republican who supported the Planned Parenthood ban, said the state should seek some deal to keep people from losing their coverage.

“If the state can’t reach an agreement with the federal government, then the state should back off in the face of losing all its Medicaid funding,” he said.

Kansas state lawmakers approved a budget earlier this month that restricts funding for Planned Parenthood. North Carolina lawmakers also are expected to block funds for the group.

HHS issued a warning letter to all 50 states this week, effectively firing a “shot across the bow” of others considering similar actions, said Betty Cockrum, president of Planned Parenthood of Indiana.


Associated Press writer Deanna Martin contributed to this report.