- Associated Press - Friday, February 21, 2014

TRENTON, N.J. — New Jersey has been stripped of a $7.6 million grant toward a health insurance overhaul after Gov. Chris Christie’s administration failed to submit a plan for using the money to steer uninsured residents to health plans, federal health officials said in a statement Friday.

The money awarded two years ago was originally intended to help set up a state health insurance exchange in accordance with the new federal law. Only about $3,000 of the total has been used.

The U.S. Department of Health and Human Services said the state could keep the money after deciding to join the federal exchange, but limited how it could be spent. The state had until Thursday to submit a plan that met the guidelines.

Federal officials did not definitively say New Jersey would lose the funds until Friday evening in a statement to The Associated Press.

“We were eager to work with the state of New Jersey to help them re-scope their grant for activities in a way that is consistent with program guidance and regulations,” Fabien Levy, a department spokesman, said in the statement. “However, the state never submitted a re-scoped grant proposal for allowable activities under the law, triggering the marketplace grant to now officially close.”

The state did submit a plan, which primarily would expand a Medicaid call center, which the federal government said was not a valid use.

Several advocates for the poor and uninsured in New Jersey had pressed the state to use the money to promote new insurance options under President Barack Obama’s health insurance overhaul, something they say would have been allowed under the federal rules.

When it appeared Thursday that the state was going to lose the funding, Raymond Castro, a policy analyst with the liberal New Jersey Policy Perspective think tank, said the state was hurting the uninsured.

“Where are New Jersey’s uninsured to turn?” he asked. “The state will not help them, and now it is clear nothing will be done to help the federal government reach them.”

A spokesman for Christie did not immediately return a message Friday.

The New Jersey banking and insurance commissioner sent a letter this week to the federal government asking for permission to use the money as the state sees fit, saying its plans fit the spirit of the federal requirements. But the letter did not persuade Health and Human Services.

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